Editor's Note:

There was a parade of positive news this morning and short panicked, running for cover. The market saw its best one-day gain in months. All of our active put plays have been stopped out. I have updated stop losses on some of our call trades.

-James

Current Portfolio:


CALL Play Updates

Donaldson Company - DCI - close: 68.35 change: +3.68

Stop Loss: 63.80
Target(s): 69.50
Current Option Gain/Loss: + 2.2%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
11/30 update: The stock market's huge rally on Wednesday pushed DCI to gap open higher at $66.15. The stock surged to $68.64 intraday and settled with a +5.6% gain. Since our trigger to buy calls was at $65.55 the trade was opened first thing this morning. Our target to exit is $69.50. More aggressive traders may want to aim higher.

We are raising our stop loss to $63.80.

(small positions) - Suggested Positions -

Long JAN $65 call (DCI1221A65) Entry $4.50*

11/30/11 new stop loss @ 63.80
11/30/11 DCI gapped higher at $66.15. Our trigger was $65.55.
*entry price is an estimate. Option did not trade on Wednesday morning.

Entry on November 30 at $66.15
Earnings Date 02/16/12 (unconfirmed)
Average Daily Volume = 306 thousand
Listed on November 29, 2011


Edwards Lifesciences - EW - close: 66.03 change: +2.50

Stop Loss: 61.95
Target(s): 69.50
Current Option Gain/Loss: Dec$65c: +35.8% & Jan$70c: +14.3%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
11/30 update: Good news! EW broke through short-term resistance near $65.00. The stock gapped open higher at $65.22 and closed up +3.9%. I am raising our stop loss to $61.95.

- Suggested Positions -

Long DEC $65 call (EW1117L65) Entry $1.95

- or -

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

11/30 new stop loss @ 61.95
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: 59.42 change: +2.37

Stop Loss: 56.45
Target(s): 64.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
11/30 update: The stock market's super strong gains on Wednesday were enough to push FDO out of its trading range and consolidation pattern. Aggressive traders may want to buy calls now. I am suggesting we buy calls on a dip at $58.50 and we'll use a stop loss at $56.45. (NOTE: In previous updates I suggested buying calls on a breakout at $58.50 as an alternative)

We are adjusting our target to $64.00. I've adjusted our option strikes below.

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 @ 58.50 (small positions)

- Suggested Positions -

buy the DEC $60 call (FDO1117L60)

- or -

buy the JAN $60 call (FDO1221A60)

11/30 New strategy to account for FDO's bullish breakout higher. We want to use a trigger at $58.50 to open bullish positions with a stop at $56.45. New target is $64.00. I've updated our option strikes.
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: 45.72 change: +1.20

Stop Loss: 42.45
Target(s): 48.25
Current Option Gain/Loss: +21.9%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
11/30 update: After outperforming yesterday shares of JBHT failed to keep up with the rally in the transportation average. The DJ transport average rallied +4.7% today. JBHT only gained +2.7%. The stock did clear potential resistance near $45.00. I am not suggesting new positions at current levels. We will raise our stop loss to $42.45.

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

11/30/11 new stop loss @ 42.45
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: 36.83 change: +1.20

Stop Loss: 33.95
Target(s): 39.50
Current Option Gain/Loss: +25.4%
Time Frame: 3 to 5 weeks
New Positions: see below

Comments:
11/30 update: NTAP gapped higher and rallied to a +3.3% gain. Yet shares have not yet broken into the big gap down. At the moment the bottom of the gap near $36.90 remains short-term resistance. Readers may want to wait for a dip into the $36.00-35.00 zone before considering new positions.

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: 77.24 change: +1.32

Stop Loss: 73.85
Target(s): 82.50
Current Option Gain/Loss: Dec$75c: - 3.5% & Jan$80c: -20.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
11/30 update: ORLY posted a +1.7% gain but the action today was kind of rocky. The stock was underperforming early afternoon before turning higher in the last hour. More conservative traders might want to inch up their stop loss.

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: 76.24 change: +1.78

Stop Loss: 71.40
Target(s): 78.50
Current Option Gain/Loss: +136.6%
Time Frame: 6 to 9 weeks
New Positions: see below

Comments:
11/30 update: Our call option has more than doubled thanks to PM's surge higher this week. The stock hit another new all-time high with today's +2.3% gain. I am not suggesting new positions at this time. We will raise our stop loss to $71.40.

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

11/30 new stop loss @ 71.40
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: 71.45 chg: +0.32

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:
11/30 update: Hmm... after all the hype about strength in material names and energy-related stocks today I was expecting a bigger pop for shares of ARLP. Instead this stock underperformed the market with a +0.4% gain versus +4.3% in the S&P 500. We are going to leave ARLP on our play list with a trigger to open bearish positions at $68.45. More aggressive traders may want to consider bearish positions now with a tight stop above $73.00.

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 $1.05/ask $1.75

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


CLOSED BEARISH PLAYS

Deutsche Bank - DB - close: 39.28 change: +3.74

Stop Loss: 36.55
Target(s): 30.50
Current Option Gain/Loss: Dec$35p: -59.6% & Jan$30p: -28.2%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
11/30 update: Coordinated action by several central banks to provide more liquidity to European banks helped fuel the European and American stock market rallies. Shares of DB soared with a +10.5% gain. The stock gapped higher at $38.30 this morning. Since our stop loss was at $36.55 the trade was closed immediately.

Earlier Comments:
Keep position size small to limit risk. This is going to be a volatile trade.

- Suggested Positions - (small positions)

DEC $35 PUT (DB1117x35) Entry $2.60 exit 1.05 (-59.6%)

- or -

JAN $30 PUT (DB1221m30) Entry $2.09 exit 1.50 (-28.2%)

11/30 Coordinated action by central banks send stocks higher. DB soars, gaps higher at $38.30. We are stopped out immediate.
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

chart:

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


Green Mountain Coffee Roasters - GMCR - cls: 52.43 change: +3.51

Stop Loss: 52.15
Target(s): 41.00
Current Option Gain/Loss: Dec$45p: -39.3% & Jan$45p: -24.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
11/30 update: When the NASDAQ composite is up more than +100 points in one day you can bet shares of a volatile stock like GMCR are going to move. The stock opened at $50.55 and rallied to $52.82 before settling at $52.43 (+7.1%). Our stop loss was hit at $52.15.

Earlier Comments:
Keep in mind that GMCR is a volatile stock and there is always the risk of another short squeeze. That's why we want to keep our position size small to limit our risk.

(Small Positions) - Suggested Positions -

DEC $45 PUT (GMCR1117X45) Entry $1.50 exit 0.91 (-39.3%)

- or -

JAN2012 $45 PUT (GMCR1221M45) Entry $3.75 exit 2.82 (-24.8%)

11/30 trade opened on gap higher at $50.55, stopped out at $52.15 thanks to the market's widespread, violent surge higher.

chart:

Entry on November 30 at $50.55
Earnings Date 02/01/12 (unconfirmed)
Average Daily Volume = 11.7 million
Listed on November 29, 2011


iShares Russell 2000 ETF - IWM - close: 73.73 change: +4.07

Stop Loss: 72.05
Target(s): 65.50
Current Option Gain/Loss: -59.0%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
11/30 update: Our speculative put play on the IWM did not work. After yesterday's failure to move it looked like the market might roll over. Then today's parade of good news powered stocks higher. The IWM gapped open at $72.56. We had a stop loss at $72.05 so the trade was closed immediately.

(Small Positions) - Suggested Positions -

Dec $69 PUT (IWM1117x69) Entry $2.15, exit $0.88 (-59.0%)

11/30/11 stopped out. IWM gapped higher at $72.56. Our stop was $72.05

chart:

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


PACCAR Inc. - PCAR - close: 40.57 change: +2.25

Stop Loss: 40.25
Target(s): 35.50
Current Option Gain/Loss: -62.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
11/30 update: The NASDAQ rallied +4.1% but PCAR managed to outperform with a +5.8% gain. A lot of that gain was produced with the stock's gap open higher at $39.76. We were quickly stopped out at $40.25.

- Suggested (Small) Positions -

DEC $39 PUT (PCAR1117X39) Entry $1.75 exit $0.65 (-62.8%)

11/30 stopped out at $40.25
11/23 new stop loss @ 40.25
11/21 new stop loss @ 41.50

chart:

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