Editor's Note:

It was a slow news day and the market was somewhat directionless. Stocks slipped lower on Monday but losses were mild. We still want to see a deeper dip to trigger some entry points. Although today's decline did see both our COST and VIP call positions get triggered. Put play MICC hit our first target.

-James

Current Portfolio:


CALL Play Updates

Caterpillar - CAT - close: 83.12 change: -0.42

Stop Loss: 79.40
Target(s): 84.85, 89.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see trigger

Comments:
11/8: Stocks faltered on Monday after last week's impressive gains. More than a little profit taking at this point would be normal for the market. I don't see any changes from my prior comments on CAT. We're still waiting for a pull back toward prior resistance and what should be new support.

Earlier Comments
Use a trigger to buy calls at $81.75. We'll use a stop loss at $79.40. Our first target is $84.85. We want to exit the majority of our position here. We'll set a secondary target at $89.50 but again I warn you the $85 level should be tough resistance. FYI: The P&F chart is bullish with a $118 target.

Trigger @ 81.75

Suggested Position:
Buy the December $85.00 calls (symbol: CAT1018L85), current ask $2.18

Entry on November xxth at $ xx.xx
Earnings Date 01/27/11
Average Daily Volume = 7.7 million
Listed on November 6th, 2010


Cliffs Natural Resources - CLF - close: 70.89 change: -0.21

Stop Loss: 61.85
Target(s): 68.75, 70.75
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes

Comments:
11/8: The U.S. dollar's bounce on Monday should have put more pressure on the commodity space but commodities held up pretty well. CLF also held on to its gains. If the dollar continues to climb it should nurture a pull back in CLF. There is no change from my prior comments.

Earlier Comments
We want to buy calls on a dip to $68.00. We'll use a stop loss at $64.75. Our upside targets are $72.00 and $74.75.

Trigger to buy calls @ $68.00

Suggested Position: Buy the 2010 December $70.00 CALL

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


Costco Wholesale - COST - close: 65.81 change: -0.59

Stop Loss: 62.90
Target(s): 69.00
Current Option Gain/Loss: + 6.0%
Time Frame: 3 to 4 weeks
New Positions: Yes, see trigger

Comments:
11/8: Bingo! Our new play in COST is now open. A little profit taking in COST pushed the stock to an intraday low of $64.24. Our trigger to buy calls was hit at $64.50. The stock bounced just as expected and looks poised to rally higher from here. If you missed the entry point I would still consider positions now but keep your position size small to limit your risk.

Current Position: December $65.00 calls (symbol: COST1018L65)
Option Entry @ $1.50

Entry on November 8th at $64.50
Earnings Date 12/09/10
Average Daily Volume = 3.4 million
Listed on November 6th, 2010


Humana Inc. - HUM - close: 59.62 change: +0.06

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

Comments:
11/8: HUM managed another gain on Monday but the action still looks short-term bearish. I am still expecting a correction. There is no change from my previous comments.

Earlier Comments
We want to wait for a dip and use a trigger at $55.25 to buy calls. Aggressive traders may want to consider puts while we wait since we're expecting such a big correction. If HUM hits our bullish trigger at $55.25 we'll use a stop loss at $51.75.

Suggested Position:

Trigger to buy calls at $55.25

BUY the 2011 January $55 calls.

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 55.97 change -0.39

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:
11/8: It looks like the pull back in financials is starting after last week's impressive breakout. The IYF dipped to $55.53 intraday. There is no change from my prior comments. However, if you're really nimble you could try using a trigger near $54.50 instead of $55.00.

Earlier Comments
We want to use a dip at $55.00 as our entry point to buy calls. 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

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


Nike Inc. - NKE - close: 83.61 change: -0.50

Stop Loss: 79.90
Target(s): 87.25
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see trigger

Comments:
11/8: NKE slipped toward $83.00 before traders bought the dip. That's not close enough for us. I'm really expecting a pull back to $82 but I don't want to miss the entry point so our trigger is at $82.50. There is no change from my prior comments.

Earlier Comments
Trigger to buy calls at $82.50. Stop loss at $79.90. Our first target is $87.25. FYI: The Point & Figure chart is very bullish with a long-term target of $115.

Trigger to buy calls @ 82.50

Suggested Position: Buy the December $85.00 CALLS (symbol:NKE1018L85)

Entry on November xxth at $ xx.xx
Earnings Date 12/21/10
Average Daily Volume = 2.3 million
Listed on November 6th, 2010


VimpelCom Ltd - VIP - close 15.72 change -0.27

Stop Loss: 14.80
Target(s): 16.75, 17.75
Current Option Gain/Loss: + 9.0%
Time Frame: 6 to 8 weeks
New Positions: Yes

Comments:
11/8: Shares of VIP showed some volatility this morning. Traders were reacting to comments over the weekend as doubts emerged over the pending merger between VIP and Orascom Telecom Holdings, owned by Egyptian billionaire Naguib Sawiri. The concerns seemed to be temporary and VIP quickly recovered. It was a good move for us since VIP dipped to $15.20 intraday. Our trigger to buy calls was hit at $15.60. If you missed the entry point I wouldn't worry. Odds are still very good that VIP will retest the $15.50-15.25 area again so you'll see another entry. FYI: VIP is due to report earnings around Nov. 24th.

Current Position: December $15.00 CALLS, Entry @ $1.05

Entry on November 8, 2010 @ 15.60
Earnings Date 11/24/2010 (unconfirmed)
Average Daily Volume: 3.5 million
Listed on November 3, 2010


PUT Play Updates

Millicom Intl. - MICC - close: 93.06 change: -2.93

Stop Loss: 98.25
Target(s): 92.50, 90.25
Current Option Gain/Loss: + 8.1%
Time Frame: 3 to 4 weeks
New Positions: No

Comments:
11/8: Target achieved! Investors were a little unhappy that Goldman Sachs initiated coverage on MICC with a "neutral". The stock gapped open lower at $94.23 and slipped toward short-term support near $92.00. Our target was hit at $92.50. I am not suggesting new positions at this time. MICC is likely to fill the gap and that means a bounce back toward $95.00-95.50 before rolling over again. We still have our final target at $90.25.

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

11/08 Target hit @ 92.50, option @ 2.85 (+16.3%)

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