Editor's Note:

Ongoing fears of a European default spooked the bulls this morning. Stocks traded off their lows but the bounce wasn't as convincing as Monday's. We saw CAT hit our first target today. I'm also suggesting readers take some profits in COST.

-James

Current Portfolio:


CALL Play Updates

Caterpillar - CAT - close: 84.60 change: +0.93

Stop Loss: 79.90
Target(s): 84.85, 89.50
Current Option Gain/Loss: +24.2% & +48.7%
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
11/30 update: Target achieved. CAT ignored the market's weakness and rallied from session lows to close near its highs with a +1.1% gain. Volume is improving and shares look poised to hit new 52-week highs tomorrow. CAT hit an intraday high of $84.92. Our primary target to take profits was hit at $84.85. We wanted to sell most (or all) of our December call options at this level. The high today for the December $85 call was $1.92. The call was trading near $1.85 at our target price.

I remain bullish on CAT. If you do launch new positions I would buy January calls. I would prefer to initiate new positions on dips in the $82.75-82.00 zone.

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

11/30 Target hit @ 84.85. Option @ $1.85 (+32.1% and +58.1%)

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: 73.71 change: +0.19

Stop Loss: 70.75
Target(s): 74.90, 79.00
Current Option Gain/Loss: +22.2%, and +26.0%
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Comments:
11/30 update: CHRW quickly recovered from its morning lows but after rising above $74.00 this afternoon, the stock began to trim its gains. I don't see any changes from my previous comments. I would still consider new positions on dips in the $73-72 zone.

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: 68.34 change: -0.64

Stop Loss: 64.75
Target(s): 71.50, 74.75
Current Option Gain/Loss: -19.0%
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Comments:
11/30 update: Uh-oh! CLF temporarily broke out above its bearish trendline of lower highs and then rolled over again. Is this a new bearish reversal? I think we need to see some confirmation first. Even if CLF does pull back the stock should still see some support near $66-65. Wait for the dip or bounce above $65 before considering new positions. 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: 67.61 change: +0.64

Stop Loss: 63.90
Target(s): 69.50
Current Option Gain/Loss: +106.6%
Time Frame: 3 to 4 weeks
New Positions: No

Comments:
11/30 update: We should take profits early! Go ahead and take some money off the table and sell part (at least half) of our December $65 call position. The call closed with a bid of $3.10 today.

COST was showing some relative strength today. The stock quickly rallied off its morning gap lower and shares traded near its highs under $68.00. There are no changes from my earlier comments on COST. 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
11/30/10 Take Profits Early, Sell half. Option @ $3.10 (+106%)

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: 60.81 change: -0.97

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:
11/30 update: So far so good. CSX was drifting lower on Tuesday. Odds favor a pull back toward support near $60.00. I'm suggesting we buy calls at $60.25.

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: 42.99 change: +0.09

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:
11/30 update: CTL continues to look strong and rallied toward resistance near $43.00 on Tuesday. If the market cooperates we can expect CTL to breakout soon. More conservative traders may want to wait for CTL to close over $43.00 before considering new positions.

CTL issued a press release this afternoon discussing the new regional structure and management to take effect once its merger with Qwest is completed in the first half of 2011.

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: 52.0980 change: -0.71

Stop Loss: 49.65
Target(s): 53.95, 57.25
Current Option Gain/Loss: -15.5%, and - 4.7%
Time Frame: 5 to 6 weeks
New Positions: Yes, wait for a dip

Comments:
11/30 update: The morning rebound attempt in ESRX failed and shares look headed lower. I would watch for support near the 40-dma or the $51.00-50.00 zone. 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 less than 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


FedEx Corp. - FDX - close: 91.12 change: -0.47

Stop Loss: 87.75
Target(s): 94.75, 99.00
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Comments:
11/30 update: FDX spiked to a new six-month high and hit $93.03 before rolling over this afternoon. The stock looks headed for $90. I am suggesting readers buy calls on a dip at $90.25. More conservative traders could wait for a potential dip into the $89-88 zone instead. Our first target is $94.75. We will set a secondary, longer-term target at $99.00.

FYI: FDX is due to report earnings on Dec. 16th. Holding over earnings is risky. More conservative traders will want to exit ahead of the announcement.

Suggested Position: TRIGGER @ $90.25

Buy the 2011 January $90.00 call (FDX1122A90) current ask $4.85

- or

Buy the 2011 April $95 call (FDX1116D95) current ask $5.00

Entry on November xxth at $ xx.xx
Earnings Date 12/16/10 (confirmed)
Average Daily Volume = 2.1 million
Listed on November 29th, 2010


W.W. Grainger Inc. - GWW - close: 124.93 change: -0.13

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:
11/30 update: GWW is still churning sideways. Traders bought the morning gap lower at $123.62 but GWW failed to hit new relative highs on the bounce. There is no change from my prior comments except I might hesitate on buying calls now. Wait for 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: 56.04 change: -0.36

Stop Loss: 53.75
Target(s): 59.75, 64.00
Current Option Gain/Loss: -18.4%
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Comments:
11/30 update: It was a quiet day for HUM. The stock traded in a 90-cent range. While HUM is holding at support near $55 and its 50-dma shares do have a bearish trend of lower highs. We can still buy calls now near support but more cautious traders may want to wait for a close over its 10-dma (near $57.00). 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: 86.13 change: +0.97

Stop Loss: 81.45
Target(s): 86.75, 89.50
Current Option Gain/Loss: + 81.7%, and +25.8%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
11/30 update: NKE is flexing its muscles once again. The stock displayed relative strength with a +1.1% gain as traders bought the dip near its rising 10-dma. Cautious traders may want to go ahead and sell their December calls here.

If you're looking for a new entry point wait for the next dip or bounce near $84.00. Our final target for the December position remains $89.50. December options have less than 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) Entry @ $2.78

11/30/10 Readers may want to exit December options early for a gain
11/30/10 Entry on January calls @ $2.78
11/29/10 Buy the bounce from $84.00
11/24/10 Target hit @ 86.75, option @ $2.60 (+126%)

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: 37.74 change: +0.12

Stop Loss: 36.85
Target(s): 40.00
Current Option Gain/Loss: +14.5% and +22.9%
Time Frame: 3 to 4 weeks
New Positions: Yes

Comments:
11/30 update: NUE gave us another entry point with the gap down at $37.22 this morning. The stock quickly rallied off its lows and traded above its 10-dma on an intraday basis before paring its gains. We might get another chance to buy a dip in the $37.50-37.00 zone soon.

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


Transocean Ltd. - RIG - close: 67.03 change: -1.64

Stop Loss: 64.75
Target(s): 72.50, 74.90
Current Option Gain/Loss: -16.2%
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Comments:
11/30 update: RIG did not see much follow through on yesterday's rally. The stock opened at $68.18 and after a rocky morning eventually settled at near its lows around $67, giving back more than half of yesterday's gain. I remain bullish on RIG and would still consider new positions in the $67.50-65.00 zone but I'm a little bit concerned with today's weakness in the major market averages. Readers may want to see if the S&P 500 can rally from 1180 again before initiating positions.

- Current Position -
Long the 2011 January $70.00 calls (RIG1122A70) Entry @ $2.95

Entry on November 30th at $68.18
Earnings Date 02/24/11 (unconfirmed)
Average Daily Volume = 6.3 million
Listed on November 29th, 2010


Union Pacific - UNP - close: 90.11 change: -0.54

Stop Loss: 87.90
Target(s): 96.25, 99.75
Current Option Gain/Loss: + 4.6%
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Comments:
11/30 update: After a little volatility this morning UNP actually had a rather boring session with the stock drifting in a narrow range. Shares opened lower at $89.83 and spent the day oscillating around the $90 level. I would still consider bullish positions at current levels but if you're worried about the market rolling over you could wait for UNP to rally past $91.00 before initiating positions.

- Current position -
Suggested Position:
Buy the 2011 January $95 calls (UNP1122A95) Entry @ $1.52

Entry on November 30th at $89.83
Earnings Date 01/20/11
Average Daily Volume = 2.9 million
Listed on November 20th, 2010


VimpelCom Ltd - VIP - close 15.67 change +0.18

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:
11/30 update: VIP showed some strength this afternoon and appears to have broken the short-term bearish trend of lower highs. The company is due to report earnings on Thursday morning. Holding over earnings is a normally a high-risk event. More cautious traders will want to exit this trade by the close tomorrow (Wednesday).
Don't forget that December options expire in less than three weeks. If VIP disappoints with its earnings results the value in our position could vanish.

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