Editor's Note:

Our FDO and WPI trades were triggered today. JBHT hit our stop loss.

-James

Current Portfolio:


CALL Play Updates

Caterpillar - CAT - close: 94.89 change: -1.07

Stop Loss: 95.45
Target(s): 107.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
12/07 update: We are still waiting for CAT to breakout past resistance near $98.00. More aggressive traders may want to consider buying calls on a dip or a bounce near the $92.00 level instead. Or as an alternative you could check out shares of Deere (DE), which look ready to breakout past resistance near $80.00 (although keep an eye on the simple 200-dma).

Our current CAT play is suggesting we buy calls with a trigger to open positions at $98.55. If triggered we'll use a stop loss at $95.45. Our target is $107.00.

Trigger @ 98.55

- Suggested Positions -

buy the 2012Jan $100 call (CAT1221A100)

Entry on December xx at $ xx.xx
Earnings Date 01/26/12 (unconfirmed)
Average Daily Volume = 8.1 million
Listed on December 03, 2011


Cooper Industries - CBE - close: 55.48 change: -1.01

Stop Loss: 54.65
Target(s): 62.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
12/07 update: CBE saw a little pull back today. Shares churned sideways in the $56-55 zone. Nimble traders might want to buy a bounce from here. I am suggesting readers wait and use a trigger at $57.05. If triggered we'll use a stop loss at $54.65. Our target is $62.50.

Trigger @ 57.05

- Suggested Positions -

buy the Jan $60 call (CBE1221A60)

Entry on December xx at $ xx.xx
Earnings Date 01/25/12 (unconfirmed)
Average Daily Volume = 3.7 million
Listed on December 06, 2011


Edwards Lifesciences - EW - close: 64.81 change: -0.37

Stop Loss: 63.25
Target(s): 69.50
Current Option Gain/Loss: Dec$65c: -25.6% & Jan$70c: -29.4%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
12/07 update: EW saw another dip toward $64.00 and briefly traded under its simple 10-dma. At this point I'd want to see a rally past $65.65 before considering new positions.

- Suggested Positions -

Long DEC $65 call (EW1117L65) Entry $1.95

- or -

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

12/03 new stop loss @ 63.25
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: 58.22 change: -0.56

Stop Loss: 56.75
Target(s): 64.00
Current Option Gain/Loss: - 21.4%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
12/07 update: Our FDO trade has been triggered. Shares hit our entry point at $58.00 this afternoon. I would still consider new positions now or more conservative traders may want to use a trigger at $57.50 or $57.00 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.

(small positions) - Suggested Positions -

Long JAN $60 call (FDO1221A60) Entry $1.40

12/07/11 trade opened at $58.00 trigger
12/03/11 Adjust buy-the-dip trigger to $58.00
12/03/11 new stop loss @ 56.75
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 December 07 at $58.00
Earnings Date 01/04/12 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on November 21, 2011


Hewlett-Packard Co. - HPQ - close: 28.41 change: +0.23

Stop Loss: 26.75
Target(s): 32.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
12/07 update: HPQ rebounded off the bottom of its five-day trading range. Shares closed just on the verge of breaking out. The high today was $28.58. We have a trigger to open positions at $28.65, which could get hit tomorrow morning.

Earlier Comments:
This is an aggressive entry point. The top of the August gap down near $29.50 could be resistance. Plus HPQ could find round-number resistance at $30.00 and technical resistance at the 150-dma, simple 200-dma and exponential 200-dma all above in the $30.00-34.00 zone. Thus we want to keep our position size small to limit our risk. We'll se our stop loss at $26.75 and our exit target at $32.00. FYI: The Point & Figure chart for HPQ is bullish with a $41 target.

Trigger @ $28.65 (small positions)

- Suggested Positions -

buy the 2012Jan $30 call (HPQ1221A30)

Entry on December xx at $ xx.xx
Earnings Date 02/22/12 (unconfirmed)
Average Daily Volume = 22.4 million
Listed on December 05, 2011


NetApp, Inc. - NTAP - close: 37.72 change: +0.44

Stop Loss: 34.95
Target(s): 39.50
Current Option Gain/Loss: +43.4%
Time Frame: 3 to 5 weeks
New Positions: see below

Comments:
12/07 update: NTAP rebounded off its morning lows but still can't breakout past resistance near $38.00 or its 50-dma. I am not suggesting new positions with NTAP sitting just under resistance.

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

12/03/11 new stop loss @ 34.95

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: 79.02 change: -0.52

Stop Loss: 74.90
Target(s): 84.00
Current Option Gain/Loss: Dec$75c: +61.4% & Jan$80c: +23.3%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/07 update: ORLY experienced a little bit of profit taking today. The $78 and $76 levels should offer some support. More conservative traders may want to raise their stops a bit. I am not suggesting new positions at this time.

- Suggested Positions -

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

12/06/11 Planned exit Dec. calls at the open. The Bid on the Dec. $75 call was $4.52 (+61.4%)
12/05/11 Strategy change: Exit the December calls tomorrow at the open. Move the exit target for the January calls from $82.50 to $84.00.
12/03/11 new stop loss @ 74.90
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: 75.58 change: +0.00

Stop Loss: 73.75
Target(s): 78.50
Current Option Gain/Loss: + 76.7%
Time Frame: 6 to 9 weeks
New Positions: see below

Comments:
12/07 update: PM briefly dipped to $74.75 before bouncing back to close unchanged on the session. I am still concerned that if the market does see any profit taking then PM could easily dip toward the $74-73 zone. I am not suggesting new positions at this time.

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

12/05 Call is up +100%, readers may want to exit now!
12/03 new stop loss @ 73.75
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


Boston Beer Co. Inc. - SAM - close: 101.31 change: -0.41

Stop Loss: 98.75
Target(s): 109.50
Current Option Gain/Loss: -39.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/07 update: SAM experienced a little bit of volatility today with a dip to $100.50 and a bounce to $103.50 before fading back into the red. I would still consider buying dips (or bounces) in the $100.50-100.00 zone.

Earlier Comments:
Our exit target is $109.50. More aggressive traders may want to aim higher. FYI: The Point & Figure chart for SAM is bullish with a $117 target. NOTE: The most recent data listed short interest at 20% of SAM's extremely small 8.3 million-share float. That's definitely a recipe for a short squeeze.

(small positions) - Suggested Positions -

Long JAN $105 call (SAM1221A105) Entry $2.05

12/03/11 new stop loss @ 98.75
12/02/11 trade triggered at $102.00

Entry on December 02 at $102.00
Earnings Date 03/08/12 (unconfirmed)
Average Daily Volume = 72.3 thousand
Listed on December 01, 2011


PUT Play Updates

SPDR S&P 500 ETF - SPY - close: 126.73 change: +0.47

Stop Loss: 127.55
Target(s): 120.50
Current Option Gain/Loss: - 7.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/07 update: The SPY is still churning sideways in the $125.00-127.00 zone. Shares did see a spike to $127.26 this afternoon. If the market rallies tomorrow morning we could see the SPY hit our stop loss at $127.55. More aggressive traders may want to raise their stop so it's above the $128.00 level instead.

Earlier Comments:
We want to keep our position size small to limit our risk.

- Suggested Positions -

Long 2012Jan $120 PUT (SPY1221M120) Entry $2.67

12/02/11 trade opened at $126.12 (gap higher), trigger was 126.00

Entry on December 02 at $126.12
Earnings Date --/--/--
Average Daily Volume = 224 million
Listed on November 30, 2011


Thermo Fisher Scientific - TMO - close: 46.98 change: -0.20

Stop Loss: 48.25
Target(s): 42.75
Current Option Gain/Loss: Dec$45p: -22.2% & Jan$45P: - 7.1%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
12/07 update: TMO is still churning sideways with a slightly bearish tilt of lower highs and lower lows. I would still consider new positions now.

Our target is $42.75. FYI: The Point & Figure chart for TMO is bearish with a $41 target.

- Suggested Positions -

Long DEC $45 put (TMO1117X45) Entry $0.45
(less than 2 weeks left for Decembers)

- or -

Long JAN $45 put (TMO1221M45) Entry $1.40

12/05/11 TMO gapped open higher at $47.10

Entry on December 05 at $47.10
Earnings Date 02/01/12 (unconfirmed)
Average Daily Volume = 3.5 million
Listed on December 03, 2011


Watson Pharmaceuticals - WPI - close: 61.98 change: -0.41

Stop Loss: 64.25
Target(s): 56.00
Current Option Gain/Loss: Dec$60p: - 0.0% & Jan$60p: - 0.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/07 update: The stock market's morning weakness was enough to push WPI under support at $62.00. Shares hit $61.22 before bouncing. Our trigger to buy puts was hit at $61.75. I would still consider new positions now.

Earlier Comments:
There is potential support at $60.00 but I am aiming for the $56.00 level.

- Suggested Positions -

Long DEC $60 PUT (WPI1117X60) Entry $0.80
(about 2 weeks left for Decembers)

- or -

Long JAN $60 PUT (WPI1221M60) Entry $2.00

Entry on December 07 at $61.75
Earnings Date 02/14/12 (unconfirmed)
Average Daily Volume = 1.5 million
Listed on December 03, 2011


CLOSED BULLISH PLAYS

JB Hunt Transport Services - JBHT - close: 45.22 change: -0.31

Stop Loss: 44.75
Target(s): 48.25
Current Option Gain/Loss: - 9.7%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
12/07 update: JBHT followed the transports lower this morning. The stock gapped open lower at $45.16 and hit our stop loss at $44.75 before recovering off its morning lows. Readers may want to keep an eye on JBHT for another opportunity on a dip or a bounce near $44 or its 50-dma.

- Suggested Positions -

2012JAN $45 call (JBHT1221A45) Entry $2.05 exit $1.85* (-9.7%)

*exit price is an estimate. option did not trade at the time of our exit.
12/07/11 stopped out @ 44.75
12/03/11 new stop loss @ 44.75. More aggressive traders may want to leave their stop under $44.00 instead
11/30/11 new stop loss @ 42.45
11/29/11 triggered at $44.35

chart:

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