Editor's Note:

December options expire in two weeks so we want to go ahead and exit early in two of our bullish candidates. I'm suggesting readers take profits in CAT and COST. RIG also hit a bullish target on Friday.

-James

Current Portfolio:


CALL Play Updates

CH Robinson Worldwide Inc. - CHRW - close: 76.35 change: +0.54

Stop Loss: 71.90
Target(s): 74.90, 79.00
Current Option Gain/Loss: +130.4%
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Comments:
12/04 update: Transports are still rolling higher and CHRW extended its gains to four days in a row. Shares look a little short-term overbought. I would expect a pull back toward the $75-74 zone. If you're looking for a new entry point I would prefer to buy calls on a dip near $74-73. Our final target is $79.00.

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

12/01: New Stop loss @ 71.90
12/01: First target hit @ $74.90 Exit all December calls: $0.95 (+111.1%)
12/01: First target hit, take profits on January calls: $ $2.00 (+73.9%)
11/27: New stop @ 70.75, new first target at $74.90

Chart:

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: 73.58 change: +1.37

Stop Loss: 67.75
Target(s): 71.50, 74.75
Current Option Gain/Loss: +81.8%
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Comments:
12/04 update: CLF extended its gains with a sharp rebound off Friday's morning low. The stock closed at new seven-month highs (again). Shares are nearing potential resistance near the $74-75 zone. I'm not suggesting new positions at this time. More conservative traders will want to strongly consider an early exit right now for our remaining December calls. Officially our final target is $74.75. December options expire in about two weeks. Look for a dip back toward $70.00 as our next entry point to buy January calls (or later). I am moving our stop loss to $67.75.

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

12/04 New stop loss $67.75
12/02 Target hit @ 71.50, option @ $3.25 (+34.2%)
12/02 New Stop loss @ 65.75

Chart:

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


CSX Corp. - CSX - close: 64.41 change: +0.38

Stop Loss: 59.75
Target(s): 64.25, 67.25
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see trigger

Comments:
12/04 update: Hmm... the disappointing jobs report on Friday morning would have been the perfect excuse to send CSX back toward support near $62.00. Yet shares only dipped to $63.56 before bouncing sharply. CSX has yet to breakout past its November highs (and 52-week highs) near $64.50. There is still a good chance this stock will correct before moving much higher. We have a trigger to buy the dip at $62.50. I'm adjusting the stop to $59.75.

Trigger to buy-the-dip @ $62.50

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

- or -

Suggested Position: Buy the 2011 February $65 calls (CSX1119B65)

12/02: New trigger @ 62.50.
12/01: New trigger @ 62.25, New stop @ 59.90, New targets.

Chart:

Entry on December 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: 43.43 change: +0.18

Stop Loss: 41.45
Target(s): 44.90, 47.25
Current Option Gain/Loss: +50.0%
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Comments:
12/04 update: CTL gained +0.4% even though it looks like shares posted a loss on the chart. The gap down was due to CTL's 1.7% dividend it paid out on Friday. The stock opened at support near prior resistance near $43.00. I would use this "dip" as a new entry point to buy calls. However, if you're feeling cautious you could look for a dip closer to $42.00 since the market looks a tiny bit overbought here.

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

12/01: Adjusted secondary target to $49.00

Chart:

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: 54.20 change: +0.12

Stop Loss: 49.65
Target(s): 53.95, 57.25
Current Option Gain/Loss: +72.1%, and +42.8%
Time Frame: 5 to 6 weeks
New Positions: Yes, see below

Comments:
12/04 update: Traders quickly bought the dip in ESRX near $53.00 but the stock did not see much follow through higher until late in the session. Previously I suggested readers use a dip near $53 as an entry point. I would still focus on decline in the $53-52 zone as possible entry points to buy calls (Januarys or later).

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

12/01: First Target Hit @ $53.95. Dec's @ $2.20 (+80.3%). Jan's @ $3.10 (+47.6%)

Chart:

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: 95.00 change: -0.21

Stop Loss: 88.45
Target(s): 94.75, 99.00
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Comments:
12/04 update: FDX held up pretty well on Friday. The stock was already short-term overbought but shares saw almost no profit taking on Friday morning. The gap down and decline quickly stalled at $94.36 and FDX spent the day drifting sideways. Meanwhile the company said they were raising prices. Next month FDX will raise their ground shipping by an average of +4.9%.

There is no change from my previous comments. I would not want to chase it here. Wait for a dip. We have a buy-the-dip trigger at $91.00.

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 @ $91.00

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

- or

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

Chart:

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


Goldman Sachs - GS - close: 162.31 change: -0.19

Stop Loss: 152.75
Target(s): 169.75
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see trigger

Comments:
12/04 update: Wow! The jobs report on Friday morning was a HUGE miss and yet stocks were barely fazed and recovered to close in positive territory. The banking indices actually outperformed the major market averages. Oddly enough GS underperformed. Shares did trend higher from their Friday morning decline but never made it back to positive territory.

I would still consider buying calls on a dip and our plan remains unchanged. Wait for a decline to $160.25 to launch positions. More conservative traders could wait for a dip closer to $158.00.

Trigger @ 160.25

Suggested Position: Buy the 2011 January $165 calls (GS1122A165) current ask $5.25

Chart:

Entry on December xxth at $ xx.xx
Earnings Date 01/18/11 (unconfirmed)
Average Daily Volume = 7.2 million
Listed on December 2nd, 2010


W.W. Grainger Inc. - GWW - close: 131.59 change: +0.43

Stop Loss: 124.75
Target(s): 129.90, 138.50
Current Option Gain/Loss: +80.0%
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Comments:
12/04 update: GWW extended its gains and hit another new all-time high ($131.93). Shares do look a little bit overbought here. I would expect a dip soon. If you're looking for a new entry point I would consider buying calls on a dip near $128.00.

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

12/02: First target hit @ 129.90, option @ $4.10 (+64%)
12/02: New stop loss @ 124.75, New final target at $138.50

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: 57.04 change: -0.43

Stop Loss: 53.75
Target(s): 59.75, 64.00
Current Option Gain/Loss: - 7.8%
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Comments:
12/04 update: Friday was a disappointing session for HUM and the healthcare sector in general. Both ended the day in negative territory. A sideways consolidation would be normal but the relative weakness versus the market these last two days is somewhat worrisome. If you're looking for a new entry point I would wait for dips near the rising 50-dma. 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.

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

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

Chart:

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: 87.53 change: -0.30

Stop Loss: 82.45
Target(s): 86.75, 89.50
Current Option Gain/Loss: +156.5%, and +56.4%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
12/04 update: NKE's relative strength has gone missing. The stock has been underperforming these last two sessions. While the long-term trend is up this recent action is a caution signal. I don't see any changes from my previous comments. I would be very tempted to exit the remaining December calls on any move over $88.00 again. The high on Friday was $87.98.

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. We still want to take profits (sell half) of our January calls at $89.50. Just remember that December options expire in about two weeks.

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

12/01/10 New stop loss @ 82.45
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, Dec. 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


Transocean Ltd. - RIG - close: 70.51 change: -0.42

Stop Loss: 64.75
Target(s): 72.50, 74.90
Current Option Gain/Loss: +27.1%
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Comments:
12/04 update: Target achieved. Some positive analyst comments helped send shares of RIG higher on Friday morning. The stock opened at $71.25 and actually hit $72.50 before paring its gains. Our first target to take profits was at $72.50. The option hit I would not be surprised to see RIG retrace back to the $68.50-68.00 zone and we can use a decline into this area as a new entry point to buy calls.

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

12/03/10 Target hit @ $72.50, option @ $4.95 (+67.7%)

Chart:

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: 94.55 change: +0.89

Stop Loss: 87.90
Target(s): 96.25, 99.75
Current Option Gain/Loss: +100.6%
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Comments:
12/04 update: Railroad stocks continued to climb and UNP managed to outpace its peers. The stock hit new all-time highs again. Shares are arguably short-term overbought. I would expect a pull back toward $92.00. We can use a dip in the $92.50-92.00 zone as another bullish entry point.

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

Chart:

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 15.06 change -0.44

Stop Loss: 14.90
Target(s): 16.75
Current Option Gain/Loss: -61.9%
Time Frame: 6 to 8 weeks
New Positions: No

Comments:
12/04 update: Warning! It could be game over for our bullish play on VIP. More conservative traders will want to exit now to salvage any remaining value. VIP underperformed on Friday with a drop toward support near $15.00 and its 50-dma. If there is any follow through lower on Monday we will likely be stopped out at $14.90. I am not suggesting new positions.

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

11/27/10 new stop @ 14.90

Chart:

Entry on November 8, 2010 @ 15.60
Earnings Date 12/02/2010 (unconfirmed)
Average Daily Volume: 3.5 million
Listed on November 3, 2010


Cimarex Energy Co. - XEC - close: 86.83 change: +1.00

Stop Loss: 79.85
Target(s): 87.40, 89.90
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Comments:
12/04 update: Naturally it is very frustrating to see a bullish candidate like XEC rally without us. Yet I would not chase it. I'm suggesting readers wait for a dip to $84.00. Cautious traders could wait for a dip closer to $82 instead.

Trigger @ 84.00

Suggested Position:
Buy the 2011 January $85 calls (XEC1122A85) current ask $4.90

Chart:

Entry on December xxth at $ xx.xx
Earnings Date 02/17/11 (unconfirmed)
Average Daily Volume = 907 thousand
Listed on December 1st, 2010


CLOSED BULLISH PLAYS

Caterpillar - CAT - close: 89.38 change: +0.76

Stop Loss: 83.75
Target(s): 84.85, 89.50
Current Option Gain/Loss: +235.7% & +301%
Time Frame: 3 to 4 weeks
New Positions: No

Comments:
12/04 update: That's close enough for me! We have been aiming for $89.50 CAT managed to recover from its Friday morning lows and hit $89.49 before the weekend. While CAT did not officially hit our exit I'm suggesting an early exit immediately. Close our December call positions now. We can look to buy calls again on a dip near $85-84. FYI: CAT has delivered the best performance in the Dow Jones Industrial Average with a +56% gain for 2010.

Take Profits now!

Closed Position:
Long the December $85 calls (symbol: CAT1018L85)
Entry @ $1.40, exit @ $4.70 (+235.7%0

Double Down New Position:
Buy the December $85 calls (CAT1018L85), current ask $1.17, exit @ $4.70 (+301%)

12/04 Exit Positions: option bid @ $4.70 (+235.7% and +301.7%)
12/02 Consider exiting for a profit now, options are up +200%
12/02 New stop loss @ 83.75
12/01 New stop loss @ 81.90
11/30 Target hit @ 84.85. Option @ $1.85 (+32.1% and +58.1%)

Chart:

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


Costco Wholesale - COST - close: 68.39 change: -0.62

Stop Loss: 64.90
Target(s): 69.50
Current Option Gain/Loss: +180.0%
Time Frame: 3 to 4 weeks
New Positions: No

Comments:
12/04 update: Whoops! COST slipped on Friday. The rest of the market managed to extend their gains. COST spiked to $69.26 and rolled over. That's too bad since our final target is $69.50. I am suggesting we go ahead and exit now just to be safe. If we had January or later calls I'd consider holding our position but we have Decembers.

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.

Closed Position:
December $65.00 calls (symbol: COST1018L65)
Option Entry @ $1.50 , exit @ $3.50 (+136.6%)
12/04/10: Exit early: option bid @ $3.50 (+136.6%)
12/01/10: New stop loss @ 64.90
11/30/10: Take Profits Early, Sell half. Option @ $3.40 (+126%)

Chart:

Entry on November 8th at $64.50
Earnings Date 12/09/10
Average Daily Volume = 3.4 million
Listed on November 6th, 2010