Editor's Note:

Stocks spiked lower on Tuesday morning as the world reacted to rising tensions on the Korean peninsula. Most of our candidates found support intraday but given the outside forces at work in Korea and Europe I'm leaning towards a wait-and-see approach before launching new bullish positions.

-James

Current Portfolio:


CALL Play Updates

Ansys, Inc. - ANSS - close: 47.71 change: -0.92

Stop Loss: 47.25
Target(s): 52.45, 54.90
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see trigger

Comments:
11/23 update: The market is not cooperating. Yesterday it looked like stocks were poised to rally higher so we adjusted our trigger for a breakout move. ANNS reversed lower thanks to the widespread market declines on geopolitical tensions and the ongoing European debt fears. ANSS should see support in the $46.50-46.00 zone and if we see the stock bounce in this area I would seriously consider buying calls on the bounce. For the moment we'll leave our trigger at $48.75.

Trigger to buy calls @ $48.75

Suggested Position: Buy the 2011 January $50.00 calls (ANSS1018L50)

Entry on November xxth at $ xx.xx
Earnings Date 02/24/11 (unconfirmed)
Average Daily Volume = 651 thousand
Listed on November 13th, 2010


Caterpillar - CAT - close: 82.63 change: -1.37

Stop Loss: 79.40
Target(s): 84.85, 89.50
Current Option Gain/Loss: -16.4% & + 0.0%
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
11/23 update: The market decline pulled CAT from $84 toward short-term support near $82.00 before shares pared their losses. I would use this pull back as a new entry point but more conservative traders could wait. If geopolitical tensions escalate CAT will probably see $80 again.

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.

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

Double Down
New Position: Buy the December $85 calls (CAT1018L85), current ask $1.17

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


CH Robinson Worldwide Inc. - CHRW - close: 72.33 change: -0.55

Stop Loss: 69.90
Target(s): 74.75, 79.00
Current Option Gain/Loss: -44.4%, and -17.3%
Time Frame: 4 to 6 weeks
New Positions: Yes

Comments:
11/23 update: CHRW held up pretty well today. I would use this weakness as a new entry point. However, if geopolitical tensions escalate in Korea it will push stocks lower and we might get a better entry point on a dip near CHRW's 50-dma near $71.00. FYI: The Point & Figure chart is very bullish with a $92 target.

Current Position: Long the December $75.00 calls (CHRW1018L75) Entry @ $0.45

- or -

Current Position: Long the January $75.00 calls (CHRW1122A75) Entry @ $1.15

Entry on November 22nd at $72.44
Earnings Date 02/03/11
Average Daily Volume = 1.1 million
Listed on November 18th, 2010


Cliffs Natural Resources - CLF - close: 67.89 change: -2.56

Stop Loss: 64.75
Target(s): 71.50, 74.75
Current Option Gain/Loss: -16.1%
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Comments:
11/23 update: Investors were seeking safety in the U.S. dollar today and the dollar strength weighed on commodity names. CLF dropped -3.6% but volume was light. I remain bullish and would look for a dip into the $66-65 zone as a new bullish entry point. Our first target is $71.50.

Current Position: Long the 2010 December $70.00 CALL, Entry @ $2.42

Entry on November 12th @ 67.00
Earnings Date 02/17/11
Average Daily Volume = 4.3 million
Listed on November 1, 2010


Costco Wholesale - COST - close: 66.90 change: -0.36

Stop Loss: 62.90
Target(s): 69.50
Current Option Gain/Loss: + 76.6%
Time Frame: 3 to 4 weeks
New Positions: No

Comments:
11/23 update: Traders were quick to buy the dip in COST this morning. I don't see any changes from my prior comments. We're not suggesting new bullish positions at current levels. Our target to exit is $69.50.

Earlier Comments
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


Express Scripts - ESRX - close: 52.74 change: -0.85

Stop Loss: 49.65
Target(s): 53.95, 57.25
Current Option Gain/Loss: +27.8%, and +16.6%
Time Frame: 5 to 6 weeks
New Positions: Yes, wait for a dip

Comments:
11/23 update: There was nothing out of the ordinary in ESRX today. We've been expecting a pull back and shares slipped under the $53.00 level only to churn sideways the rest of the session. I am suggesting readers look for a dip near $52 or lower before considering new bullish positions. Keep your position size small. Our first target to take profits is at $53.95. I'm setting a secondary target at $57.25.

We currently only have half a position open.

Current Position: Long the 2010 December $52.50 calls (ESRX1018L52.5) Entry @ $1.22
- or -
Current Position: Long the 2011 January $52.50 calls (ESRX1122A52.5) Entry @ $2.10

Entry on November 18th at $51.81
Earnings Date 02/24/11
Average Daily Volume = 4.3 million
Listed on November 17th, 2010


W.W. Grainger Inc. - GWW - close: 124.06 change: -1.89

Stop Loss: 122.95
Target(s): 129.90, 134.00
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes

Comments:
11/23 update: The market-wide declines pushed GWW to a -1.5% drop and shares settled near the bottom of its recent consolidation. Aggressive traders may want to consider buying calls on this dip or buying on a bounce from here. I'm suggesting the rest of us wait for the breakout and our trigger at $126.75.

If triggered our first target is $129.90. Our second target is $134.00. The stock could see a little short squeeze since the most recent data listed short interest at more than 5% of the 58.5 million share float (which isn't very big as far as floats go). FYI: The Point & Figure chart is bullish with a $140 target.

Trigger to launch bullish positions @ 126.75

Suggested Position: Buy the 2011 January $130 calls (GWW1122A130) current ask $2.55

Entry on November xxth at $ xx.xx
Earnings Date 01/25/11 (unconfirmed)
Average Daily Volume = 567 thousand
Listed on November 22nd, 2010


Humana Inc. - HUM - close: 56.89 change: -1.45

Stop Loss: 53.75
Target(s): 59.75, 64.00
Current Option Gain/Loss: + 0.0%
Time Frame: 4 to 6 weeks
New Positions: Yes, look for another dip

Comments:
11/23 update: HUM gave back over half of yesterday's big rally. The stock spiked lower at the open and then just hovered sideways the rest of the session. I remain bullish here and would look for dips in the $56-55 zone as a new entry point. I am suggesting we sell half of our position at $59.75 and then plan on selling the rest with a target at $64.00. New stop loss at $53.75.

11/22/10 New stop @ 53.75
11/22/10 New (2nd) target at $64.00

Current Position: Long the 2011 January $55 calls (HUM1122A55) Entry @ $3.80

Entry on November 18th at $55.05
Earnings Date 11/01/10 (confirmed)
Average Daily Volume = 2.1 million
Listed on October 16th, 2010


McKesson Corp. - MCK - close: 64.19 change: -0.93

Stop Loss: 63.75
Target(s): 67.95, 70.75
Current Option Gain/Loss: -35.4%
Time Frame: 6 to 8 weeks
New Positions: Yes

Comments:
11/23 update: Uh-oh! We could be in trouble here. MCK has pulled back toward support near $64 and actually closed under its 200-dma this afternoon. If there is any follow through lower in the market on Wednesday we will most likely get stopped out. I'm not suggesting new positions at this time. We'll wait and see how MCK performs on Wednesday. FYI: The P&F chart is bullish with an $85 target.

Current Position: Long the 2011 January $65 calls (MCK1122A65) Entry @ $3.10

Entry on November 22nd at $65.95
Earnings Date 01/26/11
Average Daily Volume = 2.7 million
Listed on November 20th, 2010


Nike Inc. - NKE - close: 85.26 change: -0.66

Stop Loss: 79.90
Target(s): 86.75, 89.50
Current Option Gain/Loss: +48.6%
Time Frame: 4 to 6 weeks
New Positions: Wait for a dip, see below

Comments:
11/23 update: NKE is still holding up well. Profit taking was very minor on Tuesday as shares bounced around the $85-86 zone. We don't want to chase the stock here. Wait for a dip or a bounce near $84 before considering new bullish positions.

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

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


Union Pacific - UNP - close: 90.32 change: -1.50

Stop Loss: 88.99
Target(s): 96.25, 99.75
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see trigger

Comments:
11/23 update: UNP is moving the wrong direction. Market weakness prompted a -1.4% decline in UNP. Shares did manage to find some support near its rising 30-dma. Unfortunately UNP closed outside its recent trading range and the short-term posture looks bearish. It could take a while to achieve but we'll keep our trigger to buy calls at $92.85 for now.

Trigger @ 92.85

Suggested Position: Buy the 2011 January $95 calls (UNP1122A95)

Entry on November xxth at $ xx.xx
Earnings Date 01/20/11
Average Daily Volume = 2.9 million
Listed on November 20th, 2010


VimpelCom Ltd - VIP - close 15.39 change -0.31

Stop Loss: 14.80
Target(s): 16.75, 17.75
Current Option Gain/Loss: -52.3%
Time Frame: 6 to 8 weeks
New Positions: Yes, on dips

Comments:
11/23 update: The market declines pushed VIP to a -1.9% loss but shares found support near $15.25 and bounced there most of the day. A rebound from current levels could be used as a new bullish entry point. FYI: VIP is due to report earnings around Dec. 2nd.

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: 105.03 change: -1.12

Stop Loss: 110.25
Target(s): 100.50
Current Option Gain/Loss: + 3.4%
Time Frame: 3 to 4 weeks
New Positions: No

Comments:
11/23 update: Tuesday's decline in LZ erased the previous day's bounce but shares were slowly drifting higher into the closing bell. I am not suggesting new positions at current levels. More conservative traders may want to lower their stops toward the $108 area. The 30-dma and 50-dma should offer a little overhead resistance.

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