Editor's Note:

PM continues to outperform and set all-time highs. UAL surged on news of its rival's bankruptcy (AMR). Meanwhile WDC rallies on positive earnings guidance from rival STX. Overall it was a mixed session. Many stocks failed to see any follow through on yesterday's bounce.

-James

Current Portfolio:


CALL Play Updates

Edwards Lifesciences - EW - close: 63.53 change: -0.33

Stop Loss: 59.90
Target(s): 69.50
Current Option Gain/Loss: Dec$65c: -20.5% & Jan$70c: -20.5%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
11/29 update: The trading in EW today was pretty disappointing. There was no follow through on yesterday's rally. The stock seems to be stuck under its simple 10-dma as it consolidated sideways under the $64 level. If the stock market retreats lower we could see EW retest support near $62.00. More conservative traders might want to use a stop loss closer to $62.00. We have a stop at $59.90.

- Suggested Positions -

Long DEC $65 call (EW1117L65) Entry $1.95

- or -

Long 2012Jan $70 call (EW1221A70) Entry $1.70

11/28 trade opened. EW gapped higher at $63.97
11/26 trade still not open. Adjusting stop loss to $59.90
11/23 still not open
11/22 not open yet

Entry on November 28 at $63.97
Earnings Date 02/02/12 (unconfirmed)
Average Daily Volume = 1.2 million
Listed on November 21, 2011


Family Dollar Stores - FDO - close: 57.05 change: +0.57

Stop Loss: 53.75
Target(s): 59.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
11/29 update: FDO added +1.0% but failed to breakout past its trendline of lower highs. For now the short-term trend is a bearish one of lower highs and lower lows, although it does look like a bull flag pattern. I don't see any changes from my prior comments.

Currently we have a buy-the-dip trigger to buy calls at $54.50. Readers might want to consider an alternative entry point on a rally past $58.50 instead.

Earlier Comments:
We want to keep our position size small because the spreads on the options below are getting wide, making this trade more risky.

buy the dip Trigger @ 54.50 (small positions)

- Suggested Positions -

buy the DEC $57.50 call (FDO1117L57.5)

- or -

buy the JAN $60 call (FDO1221A60)

11/26 new strategy. buy a dip at $54.50, stop loss @ 53.75. Keep positions small because option spreads are wide.
11/22 not open yet

Entry on November xx at $ xx.xx
Earnings Date 01/04/12 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on November 21, 2011


JB Hunt Transport Services - JBHT - close: 44.52 change: +0.74

Stop Loss: 41.99
Target(s): 48.25
Current Option Gain/Loss: - 2.4%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
11/29 update: JBHT outperformed the Dow Jones Transportation Average with a +1.6% gain today. Shares of JBHT also broke out past resistance near $44.00 and hit our trigger to buy calls at $44.35. I would still consider bullish positions now at current levels if the S&P 500 opens positive tomorrow.

Earlier Comments:
Our multi-week target is $48.25. JBHT doesn't move super fast so give yourself time for the trade to work. FYI: The Point & Figure chart for JBHT is bullish with a $63 target.

- Suggested Positions -

Long 2012JAN $45 call (JBHT1221A45) Entry $2.05

11/29/11 triggered at $44.35

Entry on November 29 at $44.35
Earnings Date 01/30/12 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on November 22, 2011


NetApp, Inc. - NTAP - close: 35.63 change: -0.09

Stop Loss: 33.95
Target(s): 39.50
Current Option Gain/Loss: + 0.0%
Time Frame: 3 to 5 weeks
New Positions: see below

Comments:
11/29 update: Both the S&P 500 and NTAP opened positive so our aggressive trade on NTAP is open. The stock opened at $35.82 but failed to make it much past the $36.00 level. Overall the action in technology stocks was disappointing with the NASDAQ composite down -0.4%. NTAP closed down -0.25%. Nimble traders might want to consider buying calls on a bounce near $35.00.

Earlier Comments:
I do consider a more aggressive trade. We want to keep our position size small to limit risk. FYI: Readers should note that there is a risk that NTAP might make an acquisition soon. There are rumors floating around that NTAP could buy Quantum (QTM) or CommVault (CVLT) in an effort to better compete with rival EMC. If NTAP does make a bid for either company typically shares of the buyer go down while shares of the target go up.

- Suggested Positions - (small positions)

Long JAN $35 call (NTAP1221A35) Entry $2.51

Entry on November 29 at $35.82
Earnings Date 02/16/12 (unconfirmed)
Average Daily Volume = 9.2 million
Listed on November 28, 2011


O'Reilly Automotive - ORLY - close: 75.92 change: +0.19

Stop Loss: 73.85
Target(s): 82.50
Current Option Gain/Loss: Dec$75c: -32.1% & Jan$80c: -36.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
11/29 update: The early morning rally failed but shares managed to close up +0.25%. Basically ORLY churned sideways. Yet if you look at an intraday chart it almost seems like ORLY has a new trend of lower highs. Today's high was $76.77. Readers may want to wait for a rally past $77.00 before initiating new positions.

Earlier Comments:
Our target is $82.50 but more conservative traders may want to exit in the $79.50-80.00 zone instead. FYI: The Point & Figure chart for ORLY is bullish with a $103 target.

- Suggested Positions -

Long DEC $75 call (ORLY1117L75) Entry $2.80

- or -

Long JAN $80 call (ORLY1221A80) Entry $1.50*

11/28/11 ORLY gapped open higher at $76.96, which was above our trigger to buy calls at $76.15.
*Jan $80 call did not trade today. Entry price is an estimate.

Entry on November 28 at $76.96
Earnings Date 02/16/12 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on November 26, 2011


Phillip Morris Intl. - PM - close: 74.46 change: +1.37

Stop Loss: 69.49
Target(s): 78.50
Current Option Gain/Loss: +68.7%
Time Frame: 6 to 9 weeks
New Positions: see below

Comments:
11/29 update: PM continues to benefit from investor interest in high-yielding stocks. Shares rallied to new all-time highs with today's peak at $75.45. The stock closed up +1.8%. If you're looking for a new entry point readers may want to wait for a dip into the $73.50-72.50 zone.

Earlier Comments:
Our multi-week target is $78.50. FYI: The Point & Figure chart for PM is bullish with a $95 target.

- Suggested Positions -

Long 2012 Jan $75 call (PM1221A75) Entry $1.12

11/23 adjusted stop loss to $69.49
11/22 trade opened. PM opened at $72.11

Entry on November 22 at $72.11
Earnings Date 02/09/12 (unconfirmed)
Average Daily Volume = 7.3 million
Listed on November 19, 2011


PUT Play Updates

Alliance Resource Partners - ARLP - close: 71.13 chg: +0.38

Stop Loss: 72.55
Target(s): 60.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
11/29 update: ARLP managed to eke out another gain but shares spent most of the day churning sideways. There is no change from my earlier comments.

Earlier Comments:
I am suggesting we use a trigger at $68.45 to buy puts and we'll use a stop loss at $72.55. It's a bit wide for a stop but ARLP can be a volatile stock. Our target is $60.50. FYI: The Point & Figure chart for ARLP is bearish with a $62 target.

NOTE: Previously I did not list the January puts because they spreads were too wide. They have come in a bit. They're still uncomfortably wide but we'll list them as a potential trade.

Trigger @ 68.45 (small positions)

- Suggested Positions -

buy the DEC $65 PUT (ARLP1117X65)

- or -

buy the JAN $65 PUT (ARLP1221M65) bid $1.20/ask $1.70

Entry on November xx at $ xx.xx
Earnings Date 01/30/12 (unconfirmed)
Average Daily Volume = 45 thousand
Listed on November 26, 2011


Deutsche Bank - DB - close: 35.54 change: +0.36

Stop Loss: 36.55
Target(s): 30.50
Current Option Gain/Loss: Dec$35p: -13.4% & Jan$30p: + 5.2%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
11/29 update: DB continued to bounce after yesterday's surge higher but gains stalled near the $36.00 level. This should be short-term resistance. Nimble traders might want to consider new bearish positions here at current levels. Bear in mind that DB's tendency to gap open makes our stop losses vulnerable to a gap higher.

Earlier Comments:
Keep position size small to limit risk. This is going to be a volatile trade. FYI: The Point & Figure chart for DB is bearish with a $30 target.

- Suggested Positions - (small positions)

Long DEC $35 PUT (DB1117x35) Entry $2.60

- or -

Long JAN $30 PUT (DB1221m30) Entry $2.09

11/28 planned exit to sell half of our puts at the open.
Dec $35 put @ $2.40 (- 7.6%)
Jan $30 put @ $2.00 (- 4.3%)
Both of these puts positions were up about +60% at Friday's close
11/26 new stop loss @ 36.55
11/26 Sell half at the open on Monday morning to lock in a gain.
11/23 new stop loss @ 37.55
11/23 more conservative traders may want to take profits now. The Dec $35 put (+61.5%) and the Jan $30 put (+62.6%)
11/21 new stop loss @ 38.75
11/12 new stop loss @ 41.55
11/11 DB gapped open higher at $39.00

Entry on November 11 at $39.00
Earnings Date 02/02/12 (unconfirmed)
Average Daily Volume = 4.3 million
Listed on November 10, 2011


iShares Russell 2000 ETF - IWM - close: 69.66 change: -0.13

Stop Loss: 72.05
Target(s): 65.50
Current Option Gain/Loss: -6.5%
Time Frame: 2 to 3 weeks
New Positions: Yes, see below

Comments:
11/29 update: There was no follow through higher for the small caps. The IWM just sat there and churned sideways near resistance at $70.00 and its 50-dma. This is good news for the bears. I would still consider new positions now.

The IWM opened at $69.84 today and hit an intraday high of $70.18.

Earlier Comments:
Make sure you're buying the normal December puts that expire on the 17th and not the one-week puts.

(Small Positions) - Suggested Positions -

Long Dec $69 PUT (IWM1117x69) Entry $2.15

Entry on November 29 at $69.84
Earnings Date --/--/--
Average Daily Volume = 66.2 million
Listed on November 28, 2011


PACCAR Inc. - PCAR - close: 38.32 change: -0.20

Stop Loss: 40.25
Target(s): 35.50
Current Option Gain/Loss: - 5.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
11/29 update: Lack of follow through on PCAR's bounce is good news for the bears. The stock failed at its 50-dma again. Readers may want to consider new bearish positions at current levels.

- Suggested (Small) Positions -

Long DEC $39 PUT (PCAR1117X39) Entry $1.75

11/23 new stop loss @ 40.25
11/21 new stop loss @ 41.50

Entry on November 18 at $39.42
Earnings Date 02/01/12 (unconfirmed)
Average Daily Volume = 3.7 million
Listed on November 17, 2011


CLOSED BEARISH PLAYS

United Continental Holdings - UAL - close: 16.58 change: +0.68

Stop Loss: 17.25
Target(s): 12.75
Current Option Gain/Loss: Dec$15p: -23.5% & Jan$14p: -11.4%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
11/29 update: Our bearish trade on the airline industry was sabotaged by news that American Airlines and its parent company AMR filed for chapter 11 bankruptcy reorganization today. AMR's larger rivals all rallied on the news. AMR's reorganization may not be a very smooth transition and fliers may choose to other carriers to avoid any potential problems with AMR. Shares of AMR fell -84% to 26 cents a share. Meanwhile UAL gapped open higher at $16.81 and quickly hit our stop loss at $17.25 before settling at $17.63 (+6.3%) for the session.

Investors will want to note that AMR claims they needed to file bankruptcy due to labor issues and high fuel costs. The company was struggling to come to an agreement with the pilot's union. I see this as a sign that pressures are mounting on all the carriers. We originally listed this trade based on news that airlines were shutting down routes with smaller planes due to rising fuel costs.

Today's trade didn't work out. However, I would keep an eye on UAL for the rally to fail (maybe near $19.00) and reconsider new bearish positions.

- Suggested Positions -

DEC $15 put (UAL1117x15) Entry $0.17 exit $0.13 (-23.5%)

- or -

JAN $14 put (UAL1221M14) Entry $0.35 exit $0.31 (-11.4%)

11/29/11 AMR files for bankruptcy. UAL rallies on the news. UAL stock gaps higher at $16.81 and hits our stop at $17.25 soon thereafter.
11/28/11 Our initial entry strategy did not work. UAL gapped open above our stop loss. We will try again. New stop loss at $17.25.

chart:

Entry on November 29 at $16.81
Earnings Date 01/26/12 (unconfirmed)
Average Daily Volume = 5.0 million
Listed on November 26, 2011


Western Digital Corp. - WDC - close: 27.51 change: +0.95

Stop Loss: 27.05
Target(s): 21.00
Current Option Gain/Loss: Dec$25p: -61.0% & Jan22.50p: -42.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
11/29 update: Rival Seagate (STX) offered positive earnings guidance this morning that garnered some analyst upgrades. This news fueled gains for both STX and rival WDC. Shares of WDC gapped open higher at $27.17. We had a stop at $27.05 so the trade was closed immediately.

- Suggested (Small) Positions -

DEC $25 PUT (WDC1117X25) Entry $1.49 exit $0.58 (-61.0%)

- or -

JAN $22.50 PUT (WDC1221M22.5) Entry $1.13 exit $0.65 (-42.4%)

11/29 STX gapped higher at $27.17, above our stop loss
11/26 new stop loss @ 27.05

chart:

Entry on November 18 at $26.04
Earnings Date 01/18/12 (unconfirmed)
Average Daily Volume = 6.4 million
Listed on November 17, 2011