Editor's Note:

Stocks struggled early on but pared their losses midday. Traders continue to buy the dips. We had COST perform well. Plus, Nike (NKE) hit our entry point this morning.

-James

Current Portfolio:


CALL Play Updates

Caterpillar - CAT - close: 82.44 change: -0.02

Stop Loss: 79.40
Target(s): 84.85, 89.50
Current Option Gain/Loss: +10.0%
Time Frame: 3 to 4 weeks
New Positions: Yes

Comments:
11/11: CAT only suffered a very minor loss on Thursday as traders bought the dip near $81.50 intraday. I don't see any big changes from previous comments. We can take advantage of dips in the $81.75-80.00 zone as new bullish entry points.

Earlier Comments
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.

Current Position: Long the December $85 calls (symbol: CAT1018L85)
Entry @ $1.40

Entry on November 9th at $ 81.75
Earnings Date 01/27/11
Average Daily Volume = 7.7 million
Listed on November 6th, 2010


Cliffs Natural Resources - CLF - close: 70.05 change: -0.01

Stop Loss: 64.75
Target(s): 71.50, 74.75
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see trigger

Comments:
11/11: Resource and commodity names held up pretty well today. CLF closed virtually unchanged with a bounce from its morning low. I would still rather buy a dip at $67.00 but more aggressive traders may want to consider a higher entry point.

Earlier Comments
We'll use a stop loss at $64.75. Our upside targets are $72.00 and $74.75.

Trigger to buy calls @ $67.00

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: 65.35 change: +0.90

Stop Loss: 62.90
Target(s): 69.00
Current Option Gain/Loss: +20.0%
Time Frame: 3 to 4 weeks
New Positions: Yes

Comments:
11/11: COST was showing some relative strength after traders bought the dip yet again near short-term support at $64.00 this morning. If you've missed the entry points thus far I would still consider bullish positions now. Remember, we want to keep our position size small to limit our 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: 59.97 change: +0.32

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

Comments:
11/11: Hmm... I may have to adjust expectations on HUM. The stock is just not seeing any real correction. Shares rallied again following yesterday's intraday reversal higher. Aggressive traders could buy calls now and just use a stop loss around $57.90 but I would much rather wait for a healthier correction. We'll keep our trigger at $55.25 for now.

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 55.08 change -0.45

Stop Loss: 53.40
Target(s): 57.50, 59.75
Current Option Gain/Loss: -10.0%
Time Frame: 6 to 8 weeks
New Positions: Yes

Comments:
11/11: Financials were underperforming again but losses were mild. I would still consider new positions at current levels.

Earlier Comments
Our first target is $57.50. Our second, longer-term target is $59.75.

Current Position: Long the December $55.00 CALLS, entry @ $2.00

Entry on November 9th @ 55.00
Earnings Date N/A (unconfirmed)
Average Daily Volume: 1.0 million
Listed on November 4, 2010


Macerich Co. - MAC - close: 46.77 change: -0.14

Stop Loss: 44.75
Target(s): 49.75, 54.00
Current Option Gain/Loss: - 7.6%
Time Frame: 4 to 5 weeks
New Positions: Yes

Comments:
11/11: There isn't much change in MAC today. The stock gapped open lower this morning, which put our entry point on the call option at $0.65. The stock was climbing off its lows most of the day. I would still consider new bullish positions now at current levels or on dips near the $46-45 zone.

Earlier Comments
Our first target is $49.75. Our second target is $54.00 but that's probably wishful thinking on my part.

Current Position: Long the December $50 calls (symbol:MAC1018L50) Entry @ $0.65

Entry on November 11th at $ 46.48
Earnings Date 02/10/11 (unconfirmed)
Average Daily Volume = 1.2 million
Listed on November 10th, 2010


Nike Inc. - NKE - close: 83.67 change: -0.21

Stop Loss: 79.90
Target(s): 86.75, 89.50
Current Option Gain/Loss: + 9.5%
Time Frame: 4 to 6 weeks
New Positions: Yes

Comments:
11/11: Bingo! Finally we got an entry point on NKE. The stock gapped open lower this morning at $83.35 and dipped to $82.99 before bouncing off its lows. Our new trigger to buy calls was hit at $83.00.

Current Position: Long the December $85.00 CALLS (symbol:NKE1018L85) Entry @ $1.15

Annotated Chart:

Entry on November 11th at $83.00
Earnings Date 12/21/10
Average Daily Volume = 2.3 million
Listed on November 6th, 2010


VimpelCom Ltd - VIP - close 15.57 change -0.14

Stop Loss: 14.80
Target(s): 16.75, 17.75
Current Option Gain/Loss: -19.0%
Time Frame: 6 to 8 weeks
New Positions: Yes

Comments:
11/11: Thursday was a quiet session for VIP with the stock trading in a 24-cent range. There are no changes from my prior comments. Readers can use dips in the $15.50-15.25 zone as a potential entry point. 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

Lubrizol Corp. - LZ - close: 107.09 change: -2.18

Stop Loss: 110.25
Target(s): 100.50
Current Option Gain/Loss: - 6.8%
Time Frame: 3 to 4 weeks
New Positions: Maybe

Comments:
11/11: The market's struggle today was good news for our LZ play. The stock gapped open lower and struggled most of the session. The stock has now closed, albeit not by much, under technical support at its 50-dma. LZ appears to be rolling over but I remain cautious on bearish trades. If you want to open positions keep your position size small to limit your risk.

Current Position: Long the December $105 puts (symbol:LZ1018X105)
Entry @ $2.90

Entry on November 10th at $107.68
Earnings Date 02/03/11 (unconfirmed)
Average Daily Volume = 525 thousand
Listed on November 9th, 2010


Millicom Intl. - MICC - close: 93.12 change: -0.33

Stop Loss: 98.25
Target(s): 92.50, 90.25
Current Option Gain/Loss: + 0.0%
Time Frame: 3 to 4 weeks
New Positions: No

Comments:
11/11: Thursday was a forgettable session for MICC. The stock traded in the same $2.00 range for the last two sessions. I'm not suggesting new positions at this time.

FYI: We 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