Editor's Note:

An earnings warning from INTC and word that Moody's might downgrade parts of Europe pushed stocks into the red.

Technology stocks underperformed thanks to INTC's news. HPQ gapped open lower, under our stop loss.

-James

Current Portfolio:


CALL Play Updates

Boeing Co. - BA - close: 70.90 change: -1.03

Stop Loss: 69.25
Target(s): 77.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
12/12 update: Shares of BA were upgraded this morning but the news failed to help the stock price. Shares gapped open lower so our trade did not open today. Traders did buy the dip near support at $70 and its 10-dma.

I am suggesting we try again. The plan is to buy calls on BA tomorrow morning but only if both BA and the S&P 500 index open positive. Given today's $1.00 drop we are adjusting our stop loss down to $69.25.

There is potential resistance at $75.00 and more conservative traders may want to exit there. I am aiming for $77.00. FYI: The Point & Figure chart for BA is bullish with a $79 target.

*See Entry Details Above*

- Suggested Positions -

buy the 2012Jan $75 call (BA1221A75)

12/12/11 adjusted stop loss to $69.25
12/12/11 trade did not open, try again.

Entry on December xx at $ xx.xx
Earnings Date 02/01/12 (unconfirmed)
Average Daily Volume = 6.2 million
Listed on December 10, 2011


Caterpillar - CAT - close: 93.24 change: -2.73

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:
12/12 update: CAT was an underperformer today. The stock's -2.8% decline almost completely erased Friday's big gain. Shares neared potential short-term support near $92.00 late this afternoon. Aggressive traders might want to consider buying the late day bounce with a very tight stop loss. The newsletter is leaving our entry point to buy calls at $98.55.

Trigger @ 98.55

- Suggested Positions -

buy the 2012Jan $100 call (CAT1221A100)

12/10/11 No change to our strategy. Use a trigger to buy calls at $98.55
12/08/11 CAT continues to slip. We will re-evaluate our entry point strategy this weekend and make adjustments or drop CAT as a candidate.

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: 53.37 change: -1.68

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:
12/12 update: CBE also underperformed today with a -3.0% drop. Shares fall toward $53 and the 50-dma before paring their losses. CBE's trend of higher lows is in jeopardy of being broken.

We are leaving our entry point to buy calls at $57.05.

Trigger @ 57.05

- Suggested Positions -

buy the Jan $60 call (CBE1221A60)

12/10/11 We will keep our trigger to buy calls @ 57.05
12/08/11 We will re-evaluate our entry point strategy this weekend and make adjustments or drop CBE as a candidate.

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


Family Dollar Stores - FDO - close: 57.57 change: -0.29

Stop Loss: 56.75
Target(s): 64.00
Current Option Gain/Loss: - 46.4%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
12/12 update: FDO held up reasonably well. Shares ended the session down -0.5% versus -1.5% for the S&P 500. The stock was struggling with the $58.00 level late in the day. I don't see any changes from my weekend comments. Readers may want to wait for a rally past $58.50 or $59.00 before considering new bullish positions.

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


FMC Technologies, Inc. - FTI - close: 49.76 change: -2.10

Stop Loss: 49.90
Target(s): 58.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 5 weeks
New Positions: Yes, see below

Comments:
12/12 update: Whoa! FTI displayed relative weakness on Monday with a -4.0% decline. The close under $50.00 is short-term bearish. I am adjusting our entry point strategy for tomorrow to buy calls at $51.05 with a stop loss at $49.40. We want to keep our position size small.

Conservative traders will want to exit near $55.00. We are setting our target at $58.00. FYI: The Point & Figure chart for FTI is bullish with a $69 target.

*See Entry Details Above*

- Suggested Positions - (Small Positions)

buy the Jan $55 call (FTI1221A55)

12/12/11 adjusted entry point strategy. use a trigger at 51.05, stop loss 49.40, keep position size small.

Entry on December xx at $ xx.xx
Earnings Date 02/14/12 (unconfirmed)
Average Daily Volume = 2.9 million
Listed on December 10, 2011


NetApp, Inc. - NTAP - close: 37.13 change: -0.88

Stop Loss: 36.25
Target(s): 39.50
Current Option Gain/Loss: +23.5%
Time Frame: 3 to 5 weeks
New Positions: see below

Comments:
12/12 update: NTAP gapped open lower this morning thanks to widespread weakness in the tech sector (thanks, INTC!) and shares hit $36.55 at their low. I am not suggesting new positions at this time.

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

12/10/11 new stop loss @ 36.25
12/08/11 new stop loss @ 35.75, more conservative traders may want to exit immediately.
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: 80.93 change: -0.11

Stop Loss: 77.85
Target(s): 84.00
Current Option Gain/Loss:(Dec$75c: +61.4%)& Jan$80c: +80.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/12 update: ORLY held up very well, closing with a fractional loss. Traders bought the dip near $80.00 this morning. I am raising our stop loss to $77.85. I am not suggesting new positions at this time.

- Suggested Positions -

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

12/12/11 new stop loss @ 77.85
12/10/11 new stop loss @ 76.90
12/08/11 new stop loss @ 76.40, more conservative traders may want to exit early.
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: 75.15 change: -0.43

Stop Loss: 73.75
Target(s): 78.50
Current Option Gain/Loss: + 42.8%
Time Frame: 6 to 9 weeks
New Positions: see below

Comments:
12/12 update: PM spent the latter half of its day in a 40-cent range, churning on either side of the $75.00 level. 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: 101.32 change: -2.65

Stop Loss: 98.75
Target(s): 109.50
Current Option Gain/Loss: -36.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/12 update: Shares of SAM continue to show volatility. The stock opened lower and dipped to $100.39 before paring its losses to -2.5%. Technically the intraday bounce near $100 looks like an entry point but I am cautious on launching new positions.

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


Watsco Inc. - WSO - close: 65.26 change: +0.09

Stop Loss: 63.25
Target(s): 69.50
Current Option Gain/Loss: Jan$65: -52.1% & Jan$70c: -47.8%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
12/12 update: WSO displayed a little relative strength by managing a small gain. Traders bought the dip near its rising 10-dma before WSO bounced back into positive territory. Given the market's weakness today I am a little hesitant to launch positions here.

FYI: The Point & Figure chart for WSO is bullish with an $80 target. NOTE: Readers may want to keep positions small, the spreads on WSO have widened significantly.

- Suggested Positions - These options are suffering from wide spreads!

Long Jan $65 call (WSO1221A65) Entry $3.45*

- or -

Long Jan $70 call (WSO1221A70) Entry $1.15*

*12/09/11 entry prices are estimates. options did not trade at the time WSO hit our entry point.

Entry on December 09 at $65.55
Earnings Date 02/14/12 (unconfirmed)
Average Daily Volume = 227 thousand
Listed on December 07, 2011


PUT Play Updates

Check Point Software - CHKP - close: 53.56 change: -1.12

Stop Loss: 56.11
Target(s): 48.00
Current Option Gain/Loss: -29.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/12 update: CHKP opened lower but found support near last week's lows. Shares ended the day down -2.0%. Readers may want to look for a drop under $52.75 as a new entry point. Conservative traders may want to lower their stop loss toward the 20-dma (near 54.65).

Earlier Comments:
There is potential support near $51.00 but we're aiming for the $48.00 level. More aggressive traders could aim lower. FYI: The Point & Figure chart for CHKP is bearish with a $46 target.

(Small Positions) - Suggested Positions -

Long Jan $50 PUT (CHKP1221M50) Entry $1.20

Entry on December 09 at $53.29
Earnings Date 01/30/12 (unconfirmed)
Average Daily Volume = 1.7 million
Listed on December 08, 2011


Juniper Networks - JNPR - close: 19.83 change: -0.07

Stop Loss: 20.75
Target(s): 16.75
Current Option Gain/Loss: - 17.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/12 update: JNPR gapped open lower, setting our entry point at $19.58. The stock spent the rest of the day churning sideways in a very narrow range before finally seeing a bounce in the last 30 minutes. I am concerned that JNPR didn't see a bigger decline. The NASDAQ lost -1.3% but JNPR only lost -0.3%. I am not suggesting new positions at this time.

(small positions) - Suggested Positions -

Long 2012Jan $17.50 PUT (JNPR1221M17.5) entry $0.57

12/12/11 JNPR gapped open lower at $19.58, opening our trade. Stop loss at $20.75

Entry on December 12 at $19.58
Earnings Date 01/24/12 (unconfirmed)
Average Daily Volume = 8.8 million
Listed on December 10, 2011


SPDR S&P 500 ETF - SPY - close: 124.21 change: -1.84

Stop Loss: 127.55
Target(s): 120.50
Current Option Gain/Loss: -18.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/12 update: The SPY slipped to new relative lows before paring its losses. Shares closed down -1.4%. I am not suggesting new positions at this time.

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: 45.13 change: -0.51

Stop Loss: 48.01
Target(s): 42.75
Current Option Gain/Loss: Dec$45p: + 22.2% & Jan$45P: +25.0%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
12/12 update: TMO spent the day drifting sideways along round-number support at the $45.00 level. I am not suggesting new positions at this time. We only have four days left before December options expire. More conservative traders may want to exit December options 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: 61.18 change: -0.34

Stop Loss: 64.25
Target(s): 56.00
Current Option Gain/Loss: Dec$60p: -43.7% & Jan$60p: - 7.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/12 update: Today looked a lot like Friday. Both days WPI produced a brief spike higher early in the morning only to see the rally reverse near $62.50. WPI tagged a new relative low at $60.78 before paring its losses. I would still consider new positions now.

Keep in mind that December options expire in four trading days.

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
(only 5 trading days 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


Market Neutral Play Updates

iShares Russell 2000 ETF - IWM - close: 73.47 change: -1.07

Stop Loss: n/a
Target(s): TBD
Current Option Gain/Loss: -41.1%
Time Frame: up to December options expiration
New Positions: Must Be Opened on Thursday 12/08

Comments:
12/12 update: Stocks are chopping sideways in a volatile manner, which is exactly what we do not want with a market neutral trade like this. We need stocks to pick a direction and go.

We only have four trading days left on this December options. I am not suggesting new positions at this time.

- Market Neutral Strangle - cost: 2.04 value: 1.04 (-49.0%)

Long DEC $77 call (IWM1117L77) Entry $0.58, current bid/ask $0.10/0.12

- Also Buy the -

Long DEC $73 put (IWM1117X73) Entry $1.46, current bid/ask $0.94/0.97

Entry on December 08 at $73.90
Earnings Date --/--/--
Average Daily Volume = 61 million
Listed on December 07, 2011


CLOSED BULLISH PLAYS

Hewlett-Packard Co. - HPQ - close: 27.34 change: -0.44

Stop Loss: 27.20
Target(s): 32.00
Current Option Gain/Loss: -48.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/12 update: Semiconductor giant Intel (INTC) issued an earnings warning this morning, claiming that the floods in Thailand and the lack of hard drives available would impact INTC's revenues. This hit the entire technology sector pretty hard and HPQ was clobbered. Shares of HPQ gapped open lower at $27.07. This was below our stop loss at $27.20. The trade was closed immediately.

(small positions) - Suggested Positions -

2012Jan $30 call (HPQ1221A30) Entry $0.80 exit $0.41

12/12/11 INTC's earnings warning hit the tech sector. HPQ gapped down below our stop loss. Trade closed at $27.07
12/08/11 HPQ broke out past resistance, hit our trigger at $28.65, and promptly reversed lower to close near the bottom of its recent trading range.

chart:

Entry on December 08 at $28.65
Earnings Date 02/22/12 (unconfirmed)
Average Daily Volume = 22.4 million
Listed on December 05, 2011