NEW DIRECTIONAL CALL PLAYS

Donaldson Company - DCI - close: 64.67 change: +0.31

Stop Loss: 63.25
Target(s): 69.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
It looks like the correction in DCI might be over. Yet the bounce back has stalled near resistance at $65.00 and its 20-dma. I am suggesting a trigger to open small bullish positions at $65.55. If triggered we'll aim for $69.50, just under the recent highs. More aggressive traders may want to aim higher. FYI: The Point & Figure chart for DCI is bullish with a $95 target.

Trigger @ 65.55 (small positions)

- Suggested Positions -

buy the JAN $65 call (DCI1221A65) current ask $3.30

Annotated Chart:

Entry on November xx at $ xx.xx
Earnings Date 02/16/12 (unconfirmed)
Average Daily Volume = 306 thousand
Listed on November 29, 2011


NEW DIRECTIONAL PUT PLAYS

Green Mountain Coffee Roasters - GMCR - cls: 48.92 change: -2.07

Stop Loss: 52.15
Target(s): 41.00
Current Option Gain/Loss: + 0.0%
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
The bulls could argue that GMCR's sideways consolidation last week is positive since the rest of the market was declining. However, I would argue that last week was just a rest period before the next leg down. GMCR still has a short-term (and longer-term) trend of lower highs. I am suggesting we open bearish put positions at the open tomorrow.

Keep in mind that GMCR is a volatile stock and there is always the risk of another short squeeze. That's why we want to keep our position size small to limit our risk. FYI: The most recent data listed short interest at 23% of the 121.7 million-share float. That does raise the risk of a short squeeze.

(Small Positions)

- Suggested Positions -

buy the DEC $45 PUT (GMCR1117X45) current ask $1.94

- or -

buy the JAN2012 $45 PUT (GMCR1221M45) current ask $4.20

Annotated Chart:

Entry on November xx at $ xx.xx
Earnings Date 02/01/12 (unconfirmed)
Average Daily Volume = 11.7 million
Listed on November 29, 2011