Editor's Note:

The market's weakness this morning was strong enough to hit one of our triggers. It also hit a couple of stops. I am also adjusting our entry point on CSX and UNP. Plus, the action in NKE looks like another entry point.

-James

Current Portfolio:


CALL Play Updates

Caterpillar - CAT - close: 83.67 change: -0.46

Stop Loss: 79.90
Target(s): 84.85, 89.50
Current Option Gain/Loss: - 5.7% & +12.8%
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
11/29 update: CAT dipped toward its 10 and 20-dma before paring its losses into the closing bell. The low was only $82.55. I have been suggesting readers buy calls on dips near $82.00. Aggressive traders could use this afternoon bounce as another entry point. We only have three weeks left before December options expire. If you do launch new positions I would buy January calls.

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: 73.52 change: -0.59

Stop Loss: 70.75
Target(s): 74.90, 79.00
Current Option Gain/Loss: +11.1%, and +21.7%
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Comments:
11/29 update: The widespread market weakness this morning pushed CHRW toward short-term support near $73.00. The correction may not be over yet but over the weekend I suggested readers look for a dip into the $73-72 zone as our next entry point. I don't see any changes from my previous comments.

Previous Comments:
When CHRW hits $74.90 we'll exit all of our December calls. We also want to sell part of our January calls at $74.90 but keep a position open for our secondary $79 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

11/27: New stop @ 70.75, new first target at $74.90

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: 68.98 change: -0.03

Stop Loss: 64.75
Target(s): 71.50, 74.75
Current Option Gain/Loss: - 2.8%
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Comments:
11/29 update: Commodity stocks were struggling this morning but the group turned around by late afternoon. CLF almost made it back into positive territory. The low was $67.14. I have been suggesting readers buy calls on dips in the $66-65 zone but more aggressive traders may want to go ahead and buy calls on this bounce today. Our first target is $71.50.

Keep in mind that December options expire in three weeks!

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: 66.97 change: -0.25

Stop Loss: 63.90
Target(s): 69.50
Current Option Gain/Loss: + 73.3%
Time Frame: 3 to 4 weeks
New Positions: No

Comments:
11/29 update: There were plenty of headlines regarding Black Friday sales today. Overall the general impression has been positive for sales but we didn't set any records this past weekend. Shares of COST dipped to $66.33 before bouncing late in the session. I don't see any changes from my previous comments. I'm not suggesting new positions at this time but another rebound in the $65 zone might change my mind on new entries. Our target to exit is $69.50. Keep in mind that December options expire in three weeks.

I also want to remind readers that COST is due to report earnings on December 9th and cautious traders do not want to hold over this event.

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: 61.78 change: +0.11

Stop Loss: 59.49
Target(s): 64.25, 67.25
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see trigger

Comments:
11/29 update: Hmm... we have a decision to make here. With the markets in sell-off mode this morning CSX only dipped to $60.77 before bouncing. Our trigger to buy calls is at $60.75. If short-term panic is not going to push CSX lower, what will? Do we decide to wait for the dip closer to $60.00 or do we look for a breakout past $62.00 instead?

I am suggesting we go ahead and wait for the dip. As a matter of fact I'm lowering our trigger to $60.50 and our stop loss to $59.49. We can always re-evaluate if CSX breaks out higher.

Trigger to buy-the-dip @ $60.25

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


CenturyLink, Inc. - CTL - close: 42.90 change: -0.14

Stop Loss: 41.45
Target(s): 44.90, 47.25
Current Option Gain/Loss: -25.0%
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Comments:
11/29 update: Bingo! We did not have to wait long for CTL to hit our trigger. The market's weakness this morning pushed CTL to an intraday low of $42.22. Our trigger to buy calls was $42.55. If you missed the entry point I would still consider positions now on the bounce or you can wait for a breakout past $43.00.

FYI: Investors should know that CTL is currently involved with a $10.6 billion stock-swap merger with Qwest Communications (Q). The merger isn't supposed to be completed until the first half of 2011. The trend for both stocks is up and naturally looks very similar following the M&A announcement.

Current Position:
Long the 2011 January $45.00 calls (CTL1122A45) Entry @ 0.20

Entry on November 29th at $42x55
Earnings Date 02/22/11
Average Daily Volume = 3.0 million
Listed on November 27th, 2010


Express Scripts - ESRX - close: 52.80 change: +0.29

Stop Loss: 49.65
Target(s): 53.95, 57.25
Current Option Gain/Loss: +16.3%, and +12.3%
Time Frame: 5 to 6 weeks
New Positions: Yes, wait for a dip

Comments:
11/29 update: ESRX dipped to $51.66 before rebounding. Shares displayed some relative strength with a +0.5% gain for the day. I have been suggesting new bullish positions in the $52-51 zone so if you missed the dip this morning you could always buy calls on this bounce. 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.

Don't forget - December options expire in three weeks.

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: 125.06 change: -0.69

Stop Loss: 122.95
Target(s): 129.90, 134.00
Current Option Gain/Loss: -28.0%
Time Frame: 4 to 6 weeks
New Positions: Yes

Comments:
11/29 update: GWW dipped toward technical support at its rising 40-dma again. I would still consider new positions here but readers may want to wait for a little more confirmation (like a rally past $126 or $127).

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

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: 56.40 change: -0.39

Stop Loss: 53.75
Target(s): 59.75, 64.00
Current Option Gain/Loss: -10.5%
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Comments:
11/29 update: HUM's rival UNH announced that they expect 2011 profits to slide lower and yet shares of UNH surged to a +1.9% gain on the session. Meanwhile HUM dipped toward support near $55.00 and its 50-dma but managed a strong rebound to recoup most of its losses. I have been suggesting readers buy dips in the $56-55 zone so we got that dip today. If you missed it I would still buy calls on this bounce. 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.

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


Nike Inc. - NKE - close: 85.16 change: -0.80

Stop Loss: 81.45
Target(s): 86.75, 89.50
Current Option Gain/Loss: + 35.6%, and + 0.0%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
11/29 update: If you were looking for another entry point we got it today. I have been suggesting that readers look for a dip near $84.00 and that's exactly what NKE did. The market's widespread weakness pushed NKE toward support near $84.00 and shares managed a nice rebound in the afternoon. I'm going to list a secondary entry point for the newsletter at current levels (if you bought January calls this morning you have a better entry point). Our final target for the December position remains $89.50. December options only have three weeks left. We will consider a higher target for the January calls.

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

- or -

(Second position)
Current Position:
Long the January $85.00 CALLS (symbol:NKE1122A85) current bid $3.00 (entry will be Tues. morning)

11/29/10 Buy the bounce from $84.00 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


Nucor Corp. - NUE - close: 37.62 change: +0.08

Stop Loss: 36.85
Target(s): 40.00
Current Option Gain/Loss: + 9.3% and +17.7%
Time Frame: 3 to 4 weeks
New Positions: Yes

Comments:
11/29 update: NUE opened at $37.38 but quickly dipped toward support near $37.00 before rebounding. If you missed the dip this morning I would still consider buying the bounce this afternoon. There is no change from my weekend comments.

Our target is the $40.00 level. More aggressive traders could aim for the $41 region.

Current Position:
Buy the 2011 January $37.00 calls (NUE1122A37) Entry @ $1.72
- or -
Buy the 2011 January $40.00 calls (NUE1122A40) Entry @ $0.61

Entry on November 29th at $37.38
Earnings Date 01/26/11
Average Daily Volume = 3.5 million
Listed on November 27th, 2010


Union Pacific - UNP - close: 90.65 change: +0.55

Stop Loss: 88.99
Target(s): 96.25, 99.75
Current Option Gain/Loss: + 0.0%
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Comments:
11/29 update: I found the action in UNP encouraging. In spite of the fears this morning shares of UNP only dipped toward last week's low and traders quickly bought the pullback. I am suggesting we go ahead and launch bullish positions now instead of waiting for a breakout. We'll adjust our stop loss to $87.90, which is about 50 cents under today's low. Everything else is unchanged.

Open positions now at current levels!

Suggested Position:
Buy the 2011 January $95 calls (UNP1122A95) current ask $1.75

Chart:

Entry on November 30th at $ xx.xx
Earnings Date 01/20/11
Average Daily Volume = 2.9 million
Listed on November 20th, 2010


VimpelCom Ltd - VIP - close 15.49 change +0.09

Stop Loss: 14.90
Target(s): 16.75, 17.75
Current Option Gain/Loss: -38.0%
Time Frame: 6 to 8 weeks
New Positions: Yes, on dips

Comments:
11/29 update: It was a quiet day for VIP in spite of the market's volatility. The stock traded inside Friday's range. I suspect VIP will churn sideways until its earnings report this Thursday. There is no change from my weekend comments.

More conservative traders do not want to hold over this report. I am raising the risk on this play by holding over the announcement.

If you choose to launch positions be sure to keep your position size small to limit your risk (and consider January options).

I want to emphasize that holding over VIP's earnings is higher-risk. If the stock crashes on its earnings report our position could get wiped out since December options only have three weeks left!

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

11/27/10 new stop @ 14.90

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 BULLISH PLAYS

Ansys, Inc. - ANSS - close: 48.05 change: -0.83

Stop Loss: 47.25
Target(s): 52.45, 54.90
Current Option Gain/Loss: -50.0%
Time Frame: 4 to 6 weeks
New Positions: Yes

Comments:
11/29 update: ANSS underperformed the market on Monday. Both the major indices and ANSS spiked lower at the open but ANSS settled with a -1.69% loss. Shares managed to bounce from the bottom of its trading range near $47.00. Unfortunately, I wasn't planning on seeing ANSS dip that low and shares hit our stop loss at $47.25 closing this trade. Readers may want to keep ANSS on their watch list for a breakout past resistance near $49.00.

Closed Position: Long the 2011 January $50.00 calls (ANSS1018L50) Entry @ $1.50, exit @ $0.75 (-50%)

Chart:

Entry on November 24th at $48.75
Earnings Date 02/24/11 (unconfirmed)
Average Daily Volume = 651 thousand
Listed on November 13th, 2010


McKesson Corp. - MCK - close: 64.26 change: -0.07

Stop Loss: 63.75
Target(s): 67.95, 70.75
Current Option Gain/Loss: -35.4%
Time Frame: 6 to 8 weeks
New Positions: No

Comments:
11/29 update: MCK final settlement left shares with a 7-cent loss but the stock slipped to $63.50 intraday. I am willing to admit that our stop loss was just a little too tight. We would have done better with a stop in the $63.40 area. Of course I was already concerned with MCK's performance and said so this weekend. Readers could keep MCK on their watch list for a breakout above this bearish trend of lower highs. Our current trade has been stopped out at $63.75.

Closed Position: Long the 2011 January $65 calls (MCK1122A65) Entry @ $3.10, Exit @ $2.00 (-35.4%)

Chart:

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