Editor's Note:

The stock market is just drifting higher as investors ignore the markets and focus more on this week's holiday.

The U.S. markets will be closed for the Thanksgiving holiday tomorrow and they will only be open half a day on Friday.

We did see our AWI and IOC trades triggered. DIA and LMT were stopped out.

Current Portfolio:


CALL Play Updates

Armstrong World Industries - AWI - close: 50.22 change: +0.87

Stop Loss: 49.25
Target(s): 54.50
Current Option Gain/Loss: -30.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
11/21/12: AWI continued to rally as we expected. Shares broke out past resistance at $50.00 and hit our trigger to buy calls at $50.25.

NOTE: it would appear the spread on our option suddenly widened on us. Hopefully it will return to normal when traders and volume return next week after the holiday.

Earlier Comments:
Shares could see another short squeeze. The most recent data listed short interest at 20% of the small 26.4 million share float.

- Suggested Positions -

Long DEC $50 call (AWI1222L50) entry $1.65

Entry on November 21 at $50.25
Average Daily Volume = 685 thousand
Listed on November 20, 2012


Dillard's Inc. - DDS - close: 86.00 change: +0.37

Stop Loss: 82.75
Target(s): 89.75
Current Option Gain/Loss: + 0.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
11/21/12: DDS spent the day hovering under the $86.00 level. Readers may want to wait for a dip and then buy a bounce when DDS rebounds.

- Suggested Positions -

Long Dec $90 call (DDS1222L90) entry $1.05

Entry on November 20 at $85.05
Average Daily Volume = 489 thousand
Listed on November 19, 2012


Dover Corp - DOV - close: 63.12 change: +0.00

Stop Loss: 59.85
Target(s): 67.50
Current Option Gain/Loss: + 7.1%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
11/21/12: It was a quiet day for DOV. The stock consolidated sideways and closed unchanged on the session. Readers may want to wait for a dip back toward $62.00 as a new entry point.

- Suggested Positions -

Long 2013 Mar $65 call (DOV1316c65) entry $2.10

11/19/12 triggered @ 62.30

Entry on November 19 at $62.30
Average Daily Volume = 1.7 million
Listed on November 17, 2012


Netflix, Inc. - NFLX - close: 83.00 change: +0.60

Stop Loss: 79.25
Target(s): 89.75
Current Option Gain/Loss: - 19.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
11/21/12: NFLX continues to slowly drift higher. Shares are nearing the next level of resistance at $85.00 and its 300-dma.

We're still waiting for the temporary short squeeze to show up.

Earlier Comments:
NFLX could see a short squeeze. The most recent data listed short interest at 31% of the 54.1 million share float. NFLX can be volatile so I am suggesting small positions to limit our risk.

- Suggested Positions -

Long DEC $85 call (NFLX1222L85) Entry $4.60

11/20/12 new stop loss @ 79.25
11/16/12 triggered @ 82.25

Entry on November 16 at $82.25
Average Daily Volume = 6.5 million
Listed on November 15, 2012


O'Reilly Automotive - ORLY - close: 91.55 change: +0.18

Stop Loss: 89.95
Target(s): 95.75
Current Option Gain/Loss: -13.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
11/21/12: ORLY churned between $90.50 and $92.00 today. I would wait for a new rally past $92.00 before considering new bullish positions. Our target is $95.75 but more aggressive traders may want to aim for the $99-100 zone instead.

- Suggested Positions -

Long DEC $95 call (ORLY1222L95) entry $1.90

Entry on November 20 at $92.05
Average Daily Volume = 1.8 million
Listed on November 19, 2012


Pharmacyclics Inc. - PCYC - close: 52.00 change: +0.18

Stop Loss: 49.65
Target(s): 56.50
Current Option Gain/Loss: - 38.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
11/21/12: The early morning rally attempt in PCYC failed. The sideways consolidation seems to be narrowing. I remain cautious here.

Earlier Comments:
I do consider this a more aggressive, higher-risk trade. Anytime you trade a biotech stock it can be a high-risk trade since you never know when a negative headline could send the stock crashing. Our target is $56.50. More aggressive traders could aim for the $59-60 zone instead.

- Suggested *Small* Positions -

long Dec $55 call (PCYC1222L55) entry $3.60

11/20/12 new stop loss @ 49.65
11/19/12 trade opened with PCYC's gap open higher @ 52.21

Entry on November 19 at $52.21
Average Daily Volume = 1.0 million
Listed on November 17, 2012


PUT Play Updates

Carpenter Tech. - CRS - close: 46.07 change: +0.34

Stop Loss: 48.05
Target(s): 42.50
Current Option Gain/Loss: - 4.3%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
11/21/12: CRS has spent the last three days churning sideways along the $46.00 level. Readers may want to start tightening their stop losses lower.

We still have half a position open. I am not suggesting new positions at this time.

Earlier Comments:
Our multi-week target is $42.50. CRS can be somewhat volatile so readers may want to limit their position size to reduce risk.

- Suggested Positions -

Long Dec $45 PUT (CRS1222x45) Entry $1.15

11/19/12 sold half at the open. unfortunately CRS gapped open higher at $45.94
exit half @ 45.95, option @ $1.20 (+4.3%)
11/17/12 new stop loss @ 48.05, sell half of our position on Monday morning
11/14/12 new stop loss @ 49.05

Entry on November 12 at $48.23
Average Daily Volume = 460 thousand
Listed on November 10, 2012


InterOil Corp. - IOC - close: 59.34 change: -0.65

Stop Loss: 61.05
Target(s): 50.50
Current Option Gain/Loss: -18.5%
Time Frame: 3 to 5 weeks
New Positions: see below

Comments:
11/21/12: IOC continues to show relative weakness. The stock spiked down this morning and hit our trigger at $58.50 on its way to $57.41. The stock did bounce but remains under the $60 level for now. I want to remind readers that this is a more aggressive, higher risk trade. IOC is volatile and has a high amount of short interest.

*Small positions* - Suggested Positions -

Long DEC $55 PUT (IOC1222x55) entry $2.70

Entry on November 21 at $58.50
Average Daily Volume = 790 thousand
Listed on November 20, 2012


iShares Russell 2000 ETF - IWM - close: 79.68 change: +0.42

Stop Loss: 80.15
Target(s): 75.50
Current Option Gain/Loss: -33.9%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
11/21/12: The IWM is still drifting higher. The small cap index and ETF is nearing what should be significant resistance at $80.00. We have a stop loss at $80.15. More aggressive traders may want to use a wider stop loss. It's always possible that the IWM dances across the $80 level intraday only to reverse lower. I am not suggesting new positions at this time.

- Suggested Positions -

Long 2013 Jan $75 PUT (IWM1319m75) entry $1.53

11/17/12 the IWM looks poised to bounce
11/14/12 new stop loss @ 80.15
11/13/12 new stop loss @ 81.05

Entry on November 08 at $79.85
Average Daily Volume = 36 million
Listed on November 7, 2012


Vornado Realty - VNO - close: 74.88 change: +0.11

Stop Loss: 75.25
Target(s): 72.50
Current Option Gain/Loss: Dec75p: - 3.5% & 2013Jan$75p: + 2.6%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
11/21/12: VNO has reached round-number resistance at $75.00. Has the oversold bounce been satisfied or will the rebound continue higher? If VNO trades much higher it will hit our stop at $75.25. I am not suggesting new positions.

- Suggested Positions -

Long DEC $75 PUT (VNO1222x75) entry $1.40*

- or -

Long 2013 Jan $75 PUT (VNO1319m75) entry $1.90*

11/16/12 sold half of our position to lock in gains.
1/2 exit Dec $75 put @ $2.55 (+82.1%)
1/2 exit 2013 Jan $75 put @ $3.10 (+63.1%)
adjust the stop loss down to $75.25
11/15/12 SELL HALF of our positions to lock in gains tomorrow morning,
move the stop loss down to $76.25 for the rest
11/14/12 readers may want to start taking profits now
new stop loss @ 78.05
11/12/12 trade opened on gap down at $76.89
*option entry price is an estimate since the option did not trade at the time our play was opened.

Entry on November 12 at $76.89
Average Daily Volume = 1.1 million
Listed on November 10, 2012


CLOSED BEARISH PLAYS

Dow Jones Industrial Average (ETF) - DIA - close: 128.15 change: +0.44

Stop Loss: 128.15
Target(s): 125.25
Current Option Gain/Loss: -33.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
11/21/12: DIA pushed above the $128.00 level and hit our stop loss at $128.15. I would keep an eye on this ETF. The $130 level and the 200-dma are both overhead and both look like potential resistance. We might see another bearish opportunity soon.

- Suggested Positions -

DEC $125 PUT (DIA1222x125) entry $1.79 exit $1.19 (-33.5%)

11/21/12 stopped out at $128.15
11/17/12 new stop loss @ 128.15
11/14/12 new stop loss @ 129.15
11/13/12 new stop loss @ 130.15
11/08/12 new stop loss @ 130.60

chart:

Entry on November 08 at $129.18
Average Daily Volume = 5.3 million
Listed on November 7, 2012


Lockheed Martin Corp. - LMT - close: 90.51 change: +0.33

Stop Loss: 90.65
Target(s): 84.25
Current Option Gain/Loss: -62.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
11/21/12: LMT gapped open higher and then spent the rest of the day inside a 50-cent range. Our stop loss was hit at $90.65.

Earlier Comments:
We do want to keep our position size small because LMT has produced a new breakdown on its daily chart but it has not yet broken below potential support on the weekly chart. It is possible the stock could bounce off the trend line displayed on the weekly chart but I doubt it given the market's broader weakness.

- Suggested *Small* Positions -

Dec $85 PUT (LMT1222x85) Entry $1.60 exit $0.60 (-62.5%)

11/21/12 stopped out at $90.65

chart:

Entry on November 15 at $88.02
Average Daily Volume = 1.6 million
Listed on November 14, 2012