Editor's Note:

The market continues to drift higher toward year's end. We're adjusting our entry point in one of the oil service plays. OII is showing some strength and the close over $75.00 looks like an entry point.

-James

Current Portfolio:


CALL Play Updates

Cummins Inc. - CMI - close: 111.25 change: +0.06

Stop Loss: 108.75
Target(s): 112.75 114.75
Current Option Gain/Loss: Unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see trigger

Comments:
12/22 update: We have been denied again! Yesterday we moved the trigger to $110.25. CMI dipped to $110.38 and spent most of the consolidating sideways near $110.50. Aggressive traders may want to go ahead and buy calls now. I still want to wait for a dip toward $110 and we'll keep our trigger at $110.25 for now. I would actually consider bullish positions on a pull back into the $110.50-109.00 zone.

CMI remains overbought and due for some profit taking thus buying calls near $110 is a high-risk trade in my book. I am suggesting small positions to limit our risk! Our new targets are $112.75 and $114.75.

Trigger @ $110.25 (SMALL POSITIONS ONLY)

- Suggested Position -
Buy the 2011 January $115 calls (CMI1122A115)

- or -

Buy the 2011 March $115 calls (CMI1119C115)

12/21: New entry point @ $110.25, New stop @ 108.75, New option strikes.

Entry on December xxth at $ xx.xx
Earnings Date 02/02/11 (unconfirmed)
Average Daily Volume = 1.8 million
Listed on December 11th, 2010


CSX Corp. - CSX - close: 63.98 change: -0.01

Stop Loss: 59.75
Target(s): 67.00, 69.50
Current Option Gain/Loss: -29.1% and -18.4%
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Comments:
12/22 update: It was a very quiet day for the railroads. The DJUSRR index closed up with a 0.02% gain. Shares of CSX closed virtually unchanged on the session. Overall I don't see any changes from my previous comments. CSX still looks poised to breakout higher from its current consolidation. Readers may want to try and time entries on a dip near $63 or wait for a breakout past $65. If you do open new positions I would buy the February calls.

- Current Positions - (We only have a small position open)

Buy the 2011 January $65 calls (CSX1122A65) Entry @ $1.75

- or -

Buy the 2011 February $65 calls (CSX1119B65) Entry @ $2.49

12/13: CSX opened at $64.39
12/11: New Entry Point Strategy. Buy half now.
12/11: New targets: 67.00, 69.50
12/02: New trigger @ 62.50.
12/01: New trigger @ 62.25, New stop @ 59.90, New targets.

Entry on December 13th at $64.39
Earnings Date 01/18/11 (unconfirmed)
Average Daily Volume = 5.9 million
Listed on November 23rd, 2010


CenturyLink, Inc. - CTL - close: 46.46 change: -0.34

Stop Loss: 43.75
Target(s): 44.90, 48.00
Current Option Gain/Loss: +725.0%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
12/22 update: CTL hit some profit taking today after surging to new relative highs yesterday. The stock should have short-term support at $46 and at $45. I am not suggesting new positions at this time.

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

12/21: Adjusted final target to $48.00
12/14: New stop loss @ 43.75
12/13: First Target Hit @ $44.90, option @ $0.85 (+325%)
12/01: Adjusted secondary target to $49.00

Entry on November 29th at $42.55
Earnings Date 02/22/11
Average Daily Volume = 3.0 million
Listed on November 27th, 2010


Cognizant Technology Solutions - CTSH - close: 72.82 change: -0.03

Stop Loss: 68.49
Target(s): 74.50, 79.00
Current Option Gain/Loss: Unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see trigger

Comments:
12/22 update: It was an extremely boring session for CTSH. The stock drifted sideways in a narrow range on low volume. Currently our plan is to buy calls on a dip at $71.50. Our first target is $74.50. Our longer-term target is $79.00.
FYI: The Point & Figure chart for CTSH is forecasting a $93 price target.

Trigger to buy calls on the dip @ $71.50

- Suggested Positions -

Buy the 2011 January $75.00 calls (CTSH1122A75) current ask $1.10

- or -

Buy the 2011 April $75.00 calls (CTSH1116D75) current ask $3.70

Entry on December xxth at $ xx.xx
Earnings Date 02/09/11 (unconfirmed)
Average Daily Volume = 2.3 million
Listed on December 18th, 2010


Express Scripts - ESRX - close: 54.75 change: +0.03

Stop Loss: 51.25
Target(s): 53.95, 58.50
Current Option Gain/Loss: +32.3% and -15.7%
Time Frame: 5 to 6 weeks
New Positions: see below

Comments:
12/22 update: There is nothing new to report on ESRX. Shares churned sideways to close almost unchanged. If you do open new positions here you may want to consider a tighter stop loss (maybe closer to $53 or $54). Our final exit target is $58.50.

FYI: The point & figure chart for ESRX is forecasting a very bullish, long-term target of $80.

We currently only have half a position open.

Current Position:
Long the 2011 January $52.50 calls (ESRX1122A52.5) Entry @ $2.10

- or -

Second Position (small position):

Long the 2011 February $55.00 calls (ESRX1119B55) current ask $2.22

12/20: Suggested new positions with Feb. 55 calls.
12/18: Adjusted final exit target to $58.50
12/16: New stop loss @ 51.25
12/07: Exit the December calls. option @ $2.01 (+64.7%)
12/01: First Target Hit @ $53.95. Dec's @ $2.20 (+80.3%). Jan's @ $3.10 (+47.6%)

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


Fastenal Co. - FAST - close: 59.60 change: -0.27

Stop Loss: 53.75
Target(s): 59.95, 62.50
Current Option Gain/Loss: Unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see trigger

Comments:
12/22 update: FAST is still stuck under resistance at $60.00. Aggressive traders could actually try buying puts with a very tight stop loss (say $60.26) in an effort to scalp part of the correction lower. I am suggesting that for most of us we just wait for the dip and buy calls at $56.75.

FYI: FAST announced a special, one-time cash dividend of 42-cents on November 18th and all of the option strikes have been adjusted for this 42-cent dividend.

Trigger @ 56.75

Suggested Positions:
Buy the 2011 January $54.58 calls (FAST1122A54.58)

- or -

Buy the 2011 February $59.58 calls (FAST1119B59.58)

12/21: Adjusted entry point trigger from 56.00 to 56.75

Entry on December xxth at $ xx.xx
Earnings Date 01/19/11 (unconfirmed)
Average Daily Volume = 880 thousand
Listed on December 8th, 2010


FedEx Corp. - FDX - close: 93.37 change: -0.32

Stop Loss: 90.90
Target(s): 96.75, 99.75
Current Option Gain/Loss: -55.0% and -15.8%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
12/22 update: FDX is still consolidating sideways on very low volume. Readers may want to wait for a new relative high (maybe over 94.50 or over 95.00) before initiating new positions. Our first target to take profits is $96.75. Our second target is $99.75.

- Suggested Positions (only small positions so far) -

Buy the 2011 January $100 call (FDX1122A100) Entry @ $0.80

- or

Buy the 2011 April $100 call (FDX1116D100) Entry @ $2.96

12/17: FDX opens at $94.23 - our entry point.
12/16: Adjusted Entry - initiate small positions now (@ Friday's open)

Entry on December 17th at $94.23
Earnings Date 12/16/10 (confirmed)
Average Daily Volume = 2.1 million
Listed on November 29th, 2010


Goldman Sachs - GS - close: 169.60 change: +1.37

Stop Loss: 162.95
Target(s): 171.00, 179.50
Current Option Gain/Loss: +52.7% and +27.1%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
12/22 update: Strength in financials and some positive analyst comments for GS help lift the stock for its third gain in a row. Shares are nearing potential resistance in the $170-171 zone and our first target to take profits at $171.00. I am raising our stop loss to $162.95. I am not suggesting new positions at current levels.
FYI: The Point & Figure chart for GS is forecasting a very bullish $224 long-term target.

- Suggested Positions (only small positions so far) -

Buy the 2011 January $170 calls (GS1122A170) Entry @ $2.75

- or -

Buy the 2011 April $175 calls (GS1116D175) Entry @ $5.27

12/22: New stop loss @ 162.95
12/17: GS opened at $163.92
12/16: Adjusted Entry - initiate small positions now (@ Friday's open)

Entry on December 17th at $163.92
Earnings Date 01/18/11 (unconfirmed)
Average Daily Volume = 7.2 million
Listed on December 2nd, 2010


International Business Machines - IBM - close: 145.95 change: +0.21

Stop Loss: 142.99
Target(s): 149.90, 157.50
Current Option Gain/Loss: Unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see trigger

Comments:
12/22 update: IBM briefly traded over $146 but there wasn't enough power behind the move. Shares hit $146.40 before paring their gains. I'm suggesting a trigger to buy calls at $146.75. FYI: The Point & Figure chart on IBM is forecasting a long-term target of $196.

Breakout Trigger @ $146.75

- Suggested Positions -

Buy the 2011 January $150 calls (IBM1122A150)

- or -

Buy the 2011 April $155 calls (IBM1116D155)

Entry on December xxth at $ xx.xx
Earnings Date 01/18/11 (unconfirmed)
Average Daily Volume = 4.7 million
Listed on December 14th, 2010


Juniper Networks - JNPR - close: 37.90 change: +0.29

Stop Loss: 34.90
Target(s): 39.75
Current Option Gain/Loss: +34.6% and +14.6%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
12/22 update: JNPR continues to rally and shares are nearing the $38.00 level. The $38 area was resistance back in the summer of 2007. This should be a good spot to expect a pull back. Wait for a dip near $36.00 before considering new bullish positions. Our first target is $39.75.

NOTE: Since this should be resistance near $38, nimble traders may want to go ahead and take profits early on their January calls and then re-enter again on a dip.

- Suggested Positions (only small positions so far) -

Buy the 2011 January $38.00 calls (JNPR1122A38) Entry @ $0.78

- or -

Buy the 2011 April $40.00 calls (JNPR1116D40) Entry @ $1.50
12/17: JNPR opens at $36.91
12/16: Adjusted Entry - initiate small positions now (@ Friday's open)

Entry on December 17th at $36.91
Earnings Date 01/25/11 (unconfirmed)
Average Daily Volume = 5.5 million
Listed on December 11th, 2010


Lockheed Martin Corp. - LMT - close: 69.35 change: -0.45

Stop Loss: 67.95
Target(s): 73.25
Current Option Gain/Loss: -51.4% and -50.0%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
12/22 update: Warning! The defense sector indices are breaking out from their recent consolidation. Yet shares of LMT are sinking lower. This is very worrisome. I am not suggesting new bullish positions at this time. More conservative traders may want to exit early or raise their stop loss (maybe raise it toward $69.00).

- Suggested Positions -

Buy the 2011 January $70.00 calls (LMT1122A70) Entry @ $1.75

- or -

Buy the 2011 March $75.00 calls (LMT1119C75) Entry @ $1.00

Entry on December 17th at $70.28
Earnings Date 01/27/11 (unconfirmed)
Average Daily Volume = 1.7 million
Listed on December 16th, 2010


Monsanto Co. - MON - close: 66.45 change: +0.15

Stop Loss: 59.89
Target(s): 67.25, 69.85
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see trigger

Comments:
12/22 update: MON spent Wednesday's session drifting sideways in a narrow range. There is no change from my prior comments. We have a trigger to buy calls on a dip at $64.25. If triggered our first target is $67.25. Our second target is $69.85.
FYI: The Point & Figure chart for MON just broke out past descending resistance and is forecasting a $74 price target.

NOTE - Readers need to know that MON is due to report earnings on January 6th. Holding over the report would be a high-risk event.

Buy-the-dip Trigger @ 64.25

- Suggested Positions -

Buy the 2011 January $65.00 calls (MON1122A65) current ask $2.22

- or -

Buy the 2011 April $65.00 calls (MON1116D65) current ask $4.65

Entry on December xxth at $ xx.xx
Earnings Date 01/06/11 (confirmed)
Average Daily Volume = 4.9 million
Listed on December 18th, 2010


Netflix Inc. - NFLX - close: 185.35 change: -0.89

Stop Loss: 174.90
Target(s): 199.50, 219.50
Current Option Gain/Loss: + 0.0%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
12/22 update: Our aggressive NFLX play isn't off to the greatest start. Shares opened at $187.12 and rallied toward $190 before paring its gains and closing in the red. Not a great sign when the rest of the market is drifting higher. Readers may want to wait for a dip (or a bounce) in the $183-180 zone before considering new bullish positions.

Make no mistake, this is a very aggressive, higher-risk trade. I suggest readers keep their positions pretty small to limit your risk. Our first target is $199.50. Our second target is $219.50.

- Suggested Positions (small positions only) -

Long the 2011 January $200 calls (NFLX1122A200) Entry @ $4.35

- or -

Long the 2011 February $220 calls (NFLX1119b220) Entry @ $5.75

Entry on December 22nd at $187.12
Earnings Date 01/26/11 (unconfirmed)
Average Daily Volume = 7.5 million
Listed on December 21st, 2010


Oceaneering International - OII - close: 75.27 change: +1.11

Stop Loss: 69.95
Target(s): 78.00, 79.95
Current Option Gain/Loss: + 0.0%
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Comments:
12/22 update: Good news! We've been talking about a potential breakout over $75.00 for days. OII finally produced one. I am suggesting we buy calls now on this move. We'll move the stop loss to $69.95 although more conservative traders may want to move it toward the 20 or 30-dma. Our new targets are $78.00 and $79.95.

Open New Positions Now on this move over $75.00

Buy the 2011 January $75 calls (OII1122A75) Current ask $3.10

- or -

Buy the 2011 January $80 calls (OII1122A80) Current ask $1.05

- or -

Buy the 2011 April $80 calls (OII1116D80) Current ask $4.00

Chart:

Entry on December 23rd at $ xx.xx
Earnings Date 02/17/11 (unconfirmed)
Average Daily Volume = 584 thousand
Listed on December 4th, 2010


Panera Break Co. - PNRA - close: 103.80 change: -1.24

Stop Loss: 103.90
Target(s): 109.95, 114.00
Current Option Gain/Loss: Unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see trigger

Comments:
12/22 update: I am pretty surprised by the relative weakness in PNRA. The stock was overbought and due for some profit taking but it is surprising to see it slide lower with the rest of the market still climbing. If we don't see PNRA recover soon I'll probably remove it as a bullish candidate. For now our trigger to buy calls remains at $107.15.

If triggered our first, short-term target is $109.90. Our second, longer-term target is $114.00. This is an aggressive trade so we want to keep our position size small. FYI: The Point & Figure chart is very bullish with a $131 target.

Breakout Trigger @ $107.15

- Suggested Positions - (small positions) -

Buy the 2011 January $110 (PNRA1122A110)

- or -

Buy the 2011 February $115 (PNRA1119B115)

Entry on December xxth at $ xx.xx
Earnings Date 02/10/11 (unconfirmed)
Average Daily Volume = 389 thousand
Listed on December 20th, 2010


Transocean Ltd. - RIG - close: 69.28 change: -0.30

Stop Loss: 66.25
Target(s): 72.50, 78.25
Current Option Gain/Loss: -37.2% and -27.7%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
12/22 update: The OSX oil service index delivered its fifth gain in a row but upward momentum is definitely slowing down. Meanwhile RIG is still consolidating sideways in the $69-70 zone. Cautious traders may want to raise their stop loss (maybe toward the 50-dma at 67.62). At this point I'd rather wait for a move over $71.00 before initiating new positions. Our final target is $78.25.

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

- Second Position -
Long the 2011 February $75.00 calls (RIG1119B75) Entry @ $1.80

12/17/10 Entry on Feb. calls @ $1.80
12/16/10 New Entry Point (buy February calls) - buy the dip.
12/11/10 New target 78.25, new stop loss $66.25
12/03/10 Target hit @ $72.50, option @ $4.95 (+67.7%)

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: 92.09 change: +0.03

Stop Loss: 89.75
Target(s): 96.25, 99.75
Current Option Gain/Loss: -36.8% and -14.5%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
12/22 update: It turned out to be a very mild day for the railroads. UNP's lack of movement was mirrored throughout the industry. Shares still look poised to rally from here. Readers can use this bounce to launch new bullish positions (I would pick the Feb. $95 calls).

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

Second Position
Buy the 2011 February $95 calls (UNP1119B95) Entry @ $2.33

12/21/10: UNP provides another entry point.
12/17/10: Entry on Feb. calls @ $2.33
12/16/10: New Entry point: buy February calls
12/16/10: New stop loss @ 89.75

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


United Parcel Service - UPS - close: 72.86 change: -0.02

Stop Loss: 66.85
Target(s): 74.75, 78.50
Current Option Gain/Loss: Unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Comments:
12/22 update: UPS is still drifting sideways. There is no change from my prior comments. We are waiting for a pull back toward support near $70.00. Our trigger to buy calls is at $70.25 but I'm looking at raising our buy-the-dip trigger toward $72.25.

Trigger @ 70.25

Suggested Position:
Buy the 2011 January $70.00 call (UPS1122A70)

- or -

Buy the 2011 April $75.00 call (UPS1116D75)

Entry on December xxth at $ xx.xx
Earnings Date 02/01/10 (unconfirmed)
Average Daily Volume = 3.9 million
Listed on December 6th, 2010


United Technology Corp. - UTX - close: 79.52 change: +0.17

Stop Loss: 73.90
Target(s): 81.50, 84.75
Current Option Gain/Loss: Unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see trigger

Comments:
12/22 update: Dow-component UTX continues to inch higher. Readers might want to consider new positions right here with the close over resistance near $79.50. I'm still a little bit hesitant to launch positions here but UTX is moving the right direction, albeit very slowly. At the moment our entry point is at $77.10.
FYI: The Point & Figure chart is bullish with a $91 target for UTX.

Trigger to buy calls @ $77.10

Suggested Position: Buy the 2011 January $80 calls (UTX1122A80)

- or -

Suggested Position: Buy the 2011 February $80 calls (UTX1119B80)

Entry on December xxth at $ xx.xx
Earnings Date 01/26/11 (unconfirmed)
Average Daily Volume = 3.2 million
Listed on December 4th, 2010


Vulcan Materials Co. - VMC - close: 45.22 change: -0.29

Stop Loss: 39.95
Target(s): 47.75
Current Option Gain/Loss: Unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see trigger

Comments:
12/22 update: The correction in VMC has resumed with a 0.6% decline. The stock is testing what could be psychological support at $45.00 but I'm expecting the pull back to continue. Right now our trigger is to buy a dip at $43.75 but readers may want to bump that to above the $44.00 level and its simple 200-dma.

Trigger @ $43.75

Suggested Position: Buy the 2011 January $45 calls (VMC1122A45)

- or -

Buy the 2011 February $45 calls (VMC1119B45)

Entry on December xxth at $ xx.xx
Earnings Date 02/07/11 (unconfirmed)
Average Daily Volume = 1.5 million
Listed on December 13th, 2010


Cimarex Energy Co. - XEC - close: 89.85 change: +0.34

Stop Loss: 84.75
Target(s): 89.90, 94.25
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Comments:
12/22 update: XEC was showing some relative strength this morning with a spike over resistance at $90.00. The stock eventually pared its gains but the trend is still up. Currently our plan is to buy calls on a dip at $86.50. We want to keep our position size pretty small to limit our risk.

Trigger @ 86.50 <-- new trigger

Suggested Position:
Buy the 2011 January $90 calls (XEC1122A90)

- or - Buy the 2011 February $90 calls (XEC1119B90)

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


PUT Play Updates

Expedia Inc. - EXPE - close: 26.62 change: -0.57

Stop Loss: 27.75
Target(s): 25.10, 24.25
Current Option Gain/Loss: -41.6%
Time Frame: 2 to 3 weeks
New Positions: No

Comments:
12/22 update: Once again the rally in EXPE is failing near resistance in the $27.50-27.60 zone. Aggressive traders could launch positions here. I am not suggesting new plays for most of our readers.

Current Position: Buy the 2011 January $25 Put (EXPE1122M25) Entry @ $0.60

Entry on December 8th at $26.88
Earnings Date 02/10/11 (unconfirmed)
Average Daily Volume = 2.5 million
Listed on December 7th, 2010