Editor's Note:

Did you notice that road sign a couple of days ago? It said, "Bulls Have Right of Way".

The OI newsletter was expecting some sort of pull back or correction following the QE news on Wednesday. The sell-off never showed up. Our bias was always bullish we just expected some sort of pull back. Now we're in the buy-the-dip mode if we can ever get a dip. I'll also be looking for some breakout candidates as well. I have updated most of the triggers for our current candidates tonight.

You might notice a few small changes in the format today. I've moved the stop loss data to the rest of the stat block with targets, etc.

-James

Current Portfolio:


CALL Play Updates

Cliffs Natural Resources - CLF - close: 71.10 change: +1.10

Stop Loss: 61.85
Target(s): 68.75, 70.75
Current Option Gain/Loss: Unopened
Time Frame: 1 to 2 weeks
New Positions: Yes

Comments:
11/6 (James): Commodity and resource names should be strong candidates thanks to the new QE2 program and what should be a weaker dollar. Eventually the dollar is going to see an oversold bounce. When that happens commodities will pull back and CLF should pull back as well. We want to hop on board when that occurs.

I am adjusting our trigger to buy calls on CLF to $68.00. Our new stop loss is $64.75. Our new targets are $72.00 and $74.75. My time frame is four to six weeks.

Trigger to buy calls @ $68.00

Suggested Position: Buy the 2010 December $70.00 CALL

Annotated Chart:

Entry on November XX
Earnings Date 02/17/11
Average Daily Volume = 4.3 million
Listed on November 1, 2010


Humana Inc. - HUM - close: 59.56 change: +0.30

Stop Loss: 51.75
Target(s): 59.75
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes

Comments:
11/6 (James): I'm not willing to give up on HUM yet. The company just reported earnings last week and that seems to have stalled the upward momentum. You can look at a daily or weekly chart and see how shares seem to be forming a short-term top. Truly nimble traders may want to buy some puts because I think HUM is going to pull back toward the $55 level. I'm suggesting we buy calls when HUM hits $55.25. If triggered we'll use a stop loss at $51.75. Our first target is $59.75.

Suggested Position:

Trigger to buy calls at $55.25 <-- new trigger!

BUY the 2011 January $55 calls.

Annotated Chart:

Entry on November xxth at $ xx.xx
Earnings Date 11/01/10 (confirmed)
Average Daily Volume = 2.1 million
Listed on October 16th, 2010


iShares DJ Financial ETF - IYF - close 56.36 change +1.02

Stop Loss: 53.40
Target(s): 57.50, 59.75
Current Option Gain/Loss: Unopened
Time Frame: 6 to 8 weeks
New Positions: Yes

Comments:
11/6 (James): The financials have been several months building a base and the action this past week has finally produced a breakout through the top of this range. We want to jump on board but not after this very sharp two-day rally. I am suggesting we use a trigger to buy calls at $54.75. If triggered we'll use a stop loss at $53.40. Our first target is $57.50. Our second, longer-term target is $59.75.

Trigger to buy calls @ 55.00

Suggested Position: Buy the December $55.00 CALLS

Annotated Chart:

Entry on November XX
Earnings Date N/A (unconfirmed)
Average Daily Volume: 1.0 million
Listed on November 4, 2010


VimpelCom Ltd - VIP - close 15.99 change -0.26

Stop Loss: 14.80
Target(s): 16.75, 17.75
Current Option Gain/Loss: Unopened
Time Frame: 6 to 8 weeks
New Positions: Yes

Comments:
11/6 (James): The action on Friday looks like a bearish reversal for VIP. That's okay since we're still waiting for an entry point. I'm suggesting we use a trigger to buy calls on a dip at $15.60. We'll keep our stop loss at $14.80. If triggered our targets are $16.75 and $17.75.

Trigger to buy calls @ 15.60

Suggested Position: Buy the December $15.00 CALL

Annotated Chart:

Entry on November XX
Earnings Date 11/24/2010 (unconfirmed)
Average Daily Volume: 3.5 million
Listed on November 3, 2010


PUT Play Updates

Millicom Intl. - MICC - close: 95.99 change: -0.98

Stop Loss: 98.25
Target(s): 92.50, 90.25
Current Option Gain/Loss: -20.0%
Time Frame: 3 to 4 weeks
New Positions: No

Comments:
11/6 (James): MICC failed at the $98.00 level a couple of days ago but I don't trust it. Even though it looks like MICC is rolling over I am concerned since the market is in rally mode. Thus I'm not suggesting new bearish positions at this time. Even if you're not playing our puts I would keep MICC on your watch list. We plan to buy the dip when shares trade near $90 or their 200-dma, which should line up with the stock's long-term bullish trend.

Current Position: Long December 2010 $90 puts (MICC1018X90)
Entry @ $2.45

Annotated Chart:

Entry on November 1, 2010
Earnings Date 02/01/11
Average Daily Volume = 490 thousand
Listed on October 30th, 2010


CLOSED BULLISH PLAYS

Volatility Index - VIX - close: 18.26 change: -0.26 stop: 17.45

Target(s): 24.90, 29.00
Key Support/Resistance Areas: 18.00, 21.00, 25.00, 30.00
Current Option Gain/Loss: -50%
Time Frame: Two or Three weeks
Comments:
11/6 (James): Sadly I was wrong on the VIX. It seemed like odds for some sort of sell-the-news move on the QE announcement were pretty good. Unfortunately, the VIX moved the opposite direction as stocks rallied higher. I am closing this play early.

Current Position: Long 2010 December 25.00 calls (VIX1022L25), entry was at $2.25

EXIT early: option bid @ $1.00 (-55.5%)

Annotated Chart:

Entry on November 1, 2010
Earnings Date N/A --/--/--
Average Daily Volume = xxx million
Listed on October 30th, 2010


CLOSED BEARISH PLAYS

PNC Financial - PNC - close 58.41 change +2.48 stop NONE

Target(s): 53.00(hit), 52.10, 51.05 (hit), 50.35
Key Support/Resistance Areas: 54.50, 53.50, 50.50, 49.50, 48.75, 47.00
Current Gain/Loss: -99%
Time Frame: 1 to 2 weeks
New Positions: Neutral

Comments:
11/6 (James): I think it's game over for this bearish position. PNC has rallied sharply with the financials in the last two days. The stock has clearly broken through several layers of resistance. I would much rather look to buy calls on a pull back (maybe near $56.00). I'm closing this play. Closed Position: Long November $48.00 PUT, entry @ $1.26, exit $0.02

Annotated Chart:

Entry on September 30, 2010
Earnings: 10/21/2010 (unconfirmed)
Average Daily Volume: 5 million
Listed on September 29, 2010