Editor's Note:

The market's afternoon rebound was impressive. Traders are still buying the dip in spite of the headlines. FDX and RIG are new plays tonight and both are showing relative strength. I have listed January calls. More aggressive traders could try December calls but Decembers expire in less than three weeks.

In an effort to save some time and get the newsletter out a little bit faster I did not post the company description in the plays tonight. Instead you'll find a link to a company description. Just click on the word "description".

- James


NEW DIRECTIONAL CALL PLAYS

FedEx Corp. - FDX - close: 91.59 change: +4.09

Stop Loss: 87.75
Target(s): 94.75, 99.00
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Shares of FDX were upgraded this morning by Credit Suisse and the stock soared to new six-month highs. This move is a bullish breakout past resistance near $90.00 and the rally was powered by strong volume. This could herald a rally toward FDX's 2010 highs and beyond. Instead of chasing the stock at current levels I am suggesting a trigger to buy calls at $90.25. If triggered we'll use a stop at $87.75. Our first target is $94.75. We will set a secondary, longer-term target at $99.00. FYI: Today's rally has created a new buy signal on the Point & Figure chart, which now points to a $104 target.

FYI: FDX is due to report earnings on Dec. 16th. Holding over earnings is risky. More conservative traders will want to exit ahead of the announcement.

Suggested Position: TRIGGER @ $90.25

Buy the 2011 January $90.00 call (FDX1122A90) current ask $4.85

- or

Buy the 2011 April $95 call (FDX1116D95) current ask $5.00

Annotated Chart:

Entry on November xxth at $ xx.xx
Earnings Date 12/16/10 (confirmed)
Average Daily Volume = 2.1 million
Listed on November 29th, 2010


Transocean Ltd. - RIG - close: 68.67 change: +2.16

Stop Loss: 64.75
Target(s): 72.50, 74.90
Current Option Gain/Loss: + 0.0%
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Crude oil is bouncing in spite of the dollar's strength. Meanwhile, after a four-week consolidation, the oil services sector looks poised to breakout higher. RIG displayed some relative strength today and could lead the group higher. I am suggesting bullish positions now at current levels. We will use a stop loss at $64.75. Our first target is $72.50. Our secondary target is $74.90.

Suggested Position: Buy calls now at current levels.

Buy the 2011 January $70.00 calls (RIG1122A70) current ask $3.15

Annotated Chart:

Entry on November 30th at $ xx.xx
Earnings Date 02/24/11 (unconfirmed)
Average Daily Volume = 6.3 million
Listed on November 29th, 2010