NEW DIRECTIONAL CALL PLAYS

Nike Inc. - NKE - close: 79.86 change: +0.91

Stop Loss: 78.45
Target(s): 84.75
Current Option Gain/Loss: Unopened
Time Frame: Exit PRIOR to earnings on Dec. 19th
New Positions: Yes, see below

Company Description

Why We Like It:
NKE is in the consumer goods sector. The company runs a massive sports apparel and footwear business. The rally in NKE continues with the stock hitting new all-time highs this past week. Shares actually appear to have been consolidating sideways the last couple of weeks. After this resting period the stock is poised for a bullish breakout past resistance near the $80.00 level.

This is a short-term trade. NKE is due to report earnings on December 19th and we do not want to hold over the announcement. Plan to exit prior to the report.

The December 2nd high was $80.14. I am suggesting a trigger to buy calls at $80.25. If triggered our target is $84.75.

FYI: NKE will begin trading ex-dividend on December 12th. The quarterly cash dividend should be 24 cents.

Trigger @ 80.25

- Suggested Positions -

buy the 2014 Jan $80 call (NKE1418a80) current ask $2.45

Annotated Chart:

Entry on December -- at $---.--
Average Daily Volume = 2.6 million
Listed on December 07, 2013


QUALCOMM Inc. - QCOM - close: 73.76 change: +0.53

Stop Loss: 71.75
Target(s): 79.50
Current Option Gain/Loss: Unopened
Time Frame: 4 to 8 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
QCOM is in the technology sector. They manufacture digital communication equipment and a lot of it is used in today's smartphones, including Apple's iPhones. There is a risk that if Apple (AAPL) has bad news it could rub off on shares of QCOM.

Currently QCOM has been consolidating sideways and actually weathered the market's recent five-day decline pretty well. Shares are now poised to breakout past resistance at $74.00. I am suggesting a trigger to buy calls at $74.25. If triggered our target is $79.50. More aggressive traders may want to aim higher since the Point & Figure chart for QCOM is bullish with a $93 target.

Trigger @ 74.25

- Suggested Positions -

Buy the 2014 Jan $75 call (QCOM1418a75) current ask $1.21

- or -

Buy the 2014 Feb $75 call (QCOM1422b75) current ask $2.30

Annotated Chart:

Weekly Chart:

Entry on December -- at $---.--
Average Daily Volume = 11.5 million
Listed on December 07, 2013


NEW DIRECTIONAL PUT PLAYS

Kansas City Southern - KSU - close: 118.15 change: +0.06

Stop Loss: 120.50
Target(s): 114.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
KSU is in the services sector. The company runs a freight railroad business through much of the U.S. and into Mexico. The stock peaked in mid November at the $126.00 level. Since then shares have started to underperform the market and that underperformance is accelerating. Not only is KSU underperforming the S&P 500 but it's underperforming the Dow Jones transportation average and it's definitely underperforming its peers in the railroad industry. The DJUSRR railroad index just hit a new all-time high on Friday. This weakness could be a reaction to falling coal volumes in KSU's business. The company sais coal volumes plunged -37% in October.

KSU tried to bounce on Friday but it failed near the $120 level. Now it's sitting on short-term support at $118.00 and poised to drop. I am suggesting a trigger to buy puts at $117.75. If triggered our target is $114.00. More aggressive traders may want to aim lower for the simple 200-dma instead.

Trigger @ 117.75

- Suggested Positions -

buy the 2014 Jan $115 PUT (KSU1418m115) current ask $2.20

Annotated Chart:

Entry on December -- at $---.--
Average Daily Volume = 486 thousand
Listed on December 07, 2013