Editor's Note:

We had two of our bullish candidates get triggered today. Meanwhile NKE hit our first target to take profits. I'm also suggesting an early exit in the LZ put play.

-James

Current Portfolio:


CALL Play Updates

Ansys, Inc. - ANSS - close: 48.99 change: +1.28

Stop Loss: 47.25
Target(s): 52.45, 54.90
Current Option Gain/Loss: - 6.6%
Time Frame: 4 to 6 weeks
New Positions: Yes

Comments:
11/24 update: ANSS bounced back to the top of its trading range and hit our trigger to buy calls at $48.75 early this morning. Now that the play is open our stop loss is at $47.25 and our first target is $52.45. Don't be surprised if the $50.00 level offers some short-term resistance.

Current Position: Long the 2011 January $50.00 calls (ANSS1018L50) Entry @ $1.50

Chart:

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: 84.69 change: +2.06

Stop Loss: 79.40
Target(s): 84.85, 89.50
Current Option Gain/Loss: +27.1% & +52.1%
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
11/24 update: CAT surged to new two-year highs and broke out past resistance near the $84.00 level. The high today was $84.79, not quite enough to tag our first target at $84.85. Odds are good that CAT will hit our target on Friday morning. Be prepared to take some money off the table. If you're looking for a new entry point I'd wait for another dip near $82.00.

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: 74.22 change: +1.89

Stop Loss: 69.90
Target(s): 74.75, 79.00
Current Option Gain/Loss: +77.7%, and +43.4%
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Comments:
11/24 update: Transports were strong performers on Wednesday. The Dow Jones Transportation index rallied +2.7%. CHRW almost kept pace with a +2.6% gain. The stock has broken out past resistance to close at new all-time highs. If you're looking for a new entry point I would wait for a dip towards $73.00. Don't forget that our first target to take profits is at $74.75. The high today was only $74.58.

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: 69.66 change: +1.77

Stop Loss: 64.75
Target(s): 71.50, 74.75
Current Option Gain/Loss: +11.5%
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Comments:
11/24 update: CLF managed to recoup most of yesterday's losses and shares closed the session hovering under the $70.00 level. I am not suggesting new positions at current levels. If you're looking for an entry point wait for a dip into the $66-65 zone. 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: 67.54 change: +0.64

Stop Loss: 63.90
Target(s): 69.50
Current Option Gain/Loss: +103.3%
Time Frame: 3 to 4 weeks
New Positions: No

Comments:
11/24 update: The market's widespread bounce helped power COST to a new 52-week high. Shares tagged 68.00 intraday. 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


CSX Corp. - CSX - close: 61.90 change: +1.71

Stop Loss: 55.75
Target(s): 60.00, 62.25
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see trigger

Comments:
11/24 update: CSX completely erased yesterday's losses with a strong +2.8% rally on Wednesday. CSX has a little trading range in the $60-62.50 zone. More aggressive traders may want to consider buying a breakout past $62.50. I'm not ready to chase it yet but you could look for a dip near $60.50 and just adjust your stop toward $60.00 to limit your risk. At the moment the newsletter is leaving our strategy unchanged. We already have a breakout trigger on UNP, another railroad stock.

Trigger to buy-the-dip @ $57.75

Suggested Position: Buy the 2011 January $60 calls (CSX1122A60)

Entry on November xxth at $ xx.xx
Earnings Date 01/18/11 (unconfirmed)
Average Daily Volume = 5.9 million
Listed on November 23rd, 2010


Express Scripts - ESRX - close: 52.94 change: +0.20

Stop Loss: 49.65
Target(s): 53.95, 57.25
Current Option Gain/Loss: +28.6%, and +17.6%
Time Frame: 5 to 6 weeks
New Positions: Yes, wait for a dip

Comments:
11/24 update: Aside from a little volatility this morning it turned out to be a very boring day for ESRX. Shares lost 20 cents on the session. I don't see any changes from my prior comments. 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: 126.70 change: +2.64

Stop Loss: 122.95
Target(s): 129.90, 134.00
Current Option Gain/Loss: - 6.0%
Time Frame: 4 to 6 weeks
New Positions: Yes

Comments:
11/24 update: Our bullish play on GWW has been triggered. The stock gapped open higher and surged to a new short-term high at $127.03. Our trigger to buy calls was hit at $126.75. If you missed the entry point you can still launch positions now or wait for a dip towards $126-125.50.
FYI: 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.

Current Position: Long the 2011 January $130 calls (GWW1122A130) Entry @ $2.50

Chart:

Entry on November 24th at $126.75
Earnings Date 01/25/11 (unconfirmed)
Average Daily Volume = 567 thousand
Listed on November 22nd, 2010


Humana Inc. - HUM - close: 56.97 change: +0.08

Stop Loss: 53.75
Target(s): 59.75, 64.00
Current Option Gain/Loss: - 2.6%
Time Frame: 4 to 6 weeks
New Positions: Yes, look for another dip

Comments:
11/24 update: HUM failed to participate in the market's widespread rally on Wednesday. Shares continued to drift sideways in a narrow range. While the relative weakness today is a concern I'm still bullish on the stock. I 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: 64.80 change: +0.61

Stop Loss: 63.75
Target(s): 67.95, 70.75
Current Option Gain/Loss: -27.4%
Time Frame: 6 to 8 weeks
New Positions: Yes

Comments:
11/24 update: MCK managed a bounce from short-term support at $64.00 but it was not a very convincing bounce. Shares only gained +0.9% versus a +1.5% rise in the market. I'm not suggesting new positions at this time. We'll wait and see how MCK performs on Friday 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: 86.53 change: +1.27

Stop Loss: 81.45
Target(s): 86.75, 89.50
Current Option Gain/Loss: +107.8%
Time Frame: 4 to 6 weeks
New Positions: Wait for a dip, see below

Comments:
11/24 update: Target achieved. NKE rallied to another all-time high and hit $86.97 intraday. Our first target to take profits was at $86.75. Our December option was trading around $2.60 (bid). I don't see any real changes from my prior comments but we are raising the stop loss to $81.45, just under the simple 50-dma. Wait for a dip or bounce near $84 before considering new positions. Our final target remains $89.50.

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

11/24/10 Target hit @ 86.75, option @ $2.60 (+126%)

Chart:

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: 90.75 change: +1.74

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:
11/24 update: Transport stocks were very strong today. UNP's +1.9% gain managed to erase all of yesterday's losses. More aggressive traders may want to buy this bounce. I'm suggesting we wait for the breakout.

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 +0.00

Stop Loss: 14.80
Target(s): 16.75, 17.75
Current Option Gain/Loss: -38.0%
Time Frame: 6 to 8 weeks
New Positions: Yes, on dips

Comments:
11/24 update: It was a relatively quiet session for VIP. Shares tagged yesterday's low and bounced but didn't make it very far. The stock closed unchanged on the session (although at least one quote service has VIP up 39 cents today). Readers can use today's bounce as a new entry point but I would keep your position size small to limit your risk. 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


CLOSED BEARISH PLAYS

Lubrizol Corp. - LZ - close: 107.72 change: +2.69

Stop Loss: 110.25
Target(s): 100.50
Current Option Gain/Loss: -39.6%
Time Frame: 3 to 4 weeks
New Positions: No

Comments:
11/24 update: It's time to go! LZ displayed way too much relative strength for me today. While you could argue that LZ still has resistance at its 50-dma and the $110 level I don't want to stick around. The market still wants to move higher and LZ hasn't seen enough follow through on its reversal lower.

I am suggesting an early exit now!

Exit early!

Closed Position: Long the December $105 puts (symbol:LZ1018X105)
Entry @ $2.90, Exit @ $1.75 (-39.6%)

Annotated Chart:

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