NEW DIRECTIONAL CALL PLAYS

Honeywell Intl. - HON - close: 89.72 change: +0.17

Stop Loss: 87.90
Target(s): 94.75
Current Option Gain/Loss: Unopened
Time Frame: exit PRIOR to earnings in late January
New Positions: Yes, see below

Company Description

Why We Like It:
HON is in the industrial goods sector. The company is a diversified technology and manufacturing giant with multiple segments including aerospace, automation and control, performance materials, and transportation systems. The company just recently issued a rather cautious outlook for 2014 but this lowered forecast has failed to stop the rally in its share price. Instead shares have rallied to a new all-time high and they're poised for a breakout past the $90.00 level.

Today's intraday high was $90.21. I am suggesting a trigger to buy calls at $90.30. If triggered our short-term target is $94.75. More aggressive traders may want to aim for the $97-100 zone instead.

Trigger @ 90.30

- Suggested Positions -

Buy the Mar $92.50 call (HON1422c92.5) current ask $1.67

Annotated Chart:

Entry on December -- at $---.--
Average Daily Volume = 2.4 million
Listed on December 23, 2013


Sturm, Ruger & Co. Inc. - RGR - close: 73.66 change: +0.77

Stop Loss: 71.75
Target(s): 79.50
Current Option Gain/Loss: Unopened
Time Frame: 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
RGR is a gun manufacturer. It has been a banner year for gun sales. The FBI ran a record-breaking 19 million background checks in just the first eleven months of 2013. We suspect the up trend in RGR will continue. The recent correction from its highs near $80 and the consolidation above its 50-dma is providing a new entry point for traders.

Currently RGR is hovering below short-term resistance near $74.00. A breakout here could spark a short squeeze. The most recent data listed short interest at 32% of the very small 18.8 million share float.

I am suggesting a trigger to buy calls at $74.25. If triggered our target is $79.50. More aggressive traders could aim higher.

Trigger @ 74.25

- Suggested Positions -

Buy the Apr $75 call (RGR1419D75) current ask $3.90

Annotated Chart:

Entry on December -- at $---.--
Average Daily Volume = 294 thousand
Listed on December 23, 2013