NEW DIRECTIONAL CALL PLAYS

Humana Inc. - HUM - close: 94.71 change: +0.82

Stop Loss: 92.95
Target(s): 99.75
Current Option Gain/Loss: Unopened
Time Frame: 2 to 3 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
HUM is a healthcare provider. The stock has been showing relative strength this year with a breakout past resistance near $90. HUM is currently trading at all-time, record highs. It's also trading sideways under short-term resistance at $95.00.

I am suggesting a trigger to buy calls at $95.25 with a stop at $92.95. Our target is $99.75 since the $100 level might be round-number, psychological resistance. We do not want to hold over the early February earnings report. FYI: The Point & Figure chart for HUM is bullish with a $109 target.

Trigger @ $95.25

- Suggested Positions -

buy the Feb $100 call (HUM1218B100)

Annotated Chart:

Entry on January xx at $ xx.xx
Earnings Date 02/06/12 (confirmed)
Average Daily Volume = 1.2 million
Listed on January 14, 2012


Mohawk Industries - MHK - close: 62.52 change: -0.45

Stop Loss: 59.90
Target(s): 67.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Mohawk produces carpet and other flooring materials. Not only has there been a rebound in housing stocks but there seems to be a growing crowd of investors and analyst expecting home prices to improve in 2012. Any improvement in the housing sector should benefit MHK. This stock broke out from a two-week consolidation on Wednesday this past week. Friday's pull back and bounce off its intraday lows looks like a new entry point.

I am suggesting new bullish positions on Tuesday morning but only if both the S&P 500 and MHK open higher (note: U.S. markets are closed on Monday). If the S&P 500 opens flat then we'll base our buy/not-buy decision on how MHK opens (if positive then, buy calls). We'll use a stop loss at $59.90. Our target is $67.50 but we do not want to hold over the February earnings report.

Investors will be interested to note that the most recent data listed short interest at 5% of the 57 million share float. That's not excessive but it's a bit high and could boost any new gains as bears cover their shorts.

FYI: The Point & Figure chart for MHK is bullish with a $90 target.

*See Entry Details Above*

- Suggested Positions -

buy the Feb $65 call (MHK1218B65) current ask $1.50

Annotated Chart:

Entry on January xx at $ xx.xx
Earnings Date 02/21/12 (unconfirmed)
Average Daily Volume = 621 thousand
Listed on January 14, 2012


Teva Pharmaceuticals - TEVA - close: 44.55 change: +0.29

Stop Loss: 43.75
Target(s): 49.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
TEVA is a generic drug maker. The stock has seen an impressive 2012 already. The breakthrough past technical resistance at the 150-dma and 200-dma in the past two weeks is bullish. Currently shares are consolidating sideways under resistance at the $45.00 level.

I am suggesting small bullish positions if TEVA can breakout higher. We will use a trigger at $45.25. Our target is $49.50 but we'll plan to exit prior to the earnings report in early February. FYI: The Point & Figure chart for TEVA is bullish with a $57 target.

Trigger @ $45.25 (Small Positions)

- Suggested Positions -

buy the Feb $45 call (TEVA1218B45)

Annotated Chart:

Entry on January xx at $ xx.xx
Earnings Date 02/08/12 (unconfirmed)
Average Daily Volume = 5.9 million
Listed on January 14, 2012