Editor's Note:

The stock market's oversold bounce has now hit five days in a row on the S&P 500 index. The market ended the holiday week on a strong note with widespread gains.

We saw both our IWM and VNO trades stopped out.

Current Portfolio:


CALL Play Updates

Armstrong World Industries - AWI - close: 50.73 change: +0.51

Stop Loss: 49.25
Target(s): 54.50
Current Option Gain/Loss: + 3.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
11/24/12: The bounce in AWI continues. The stock added +1.0% on Friday. Shares are up four days in a row so it might be time for a dip.

NOTE: Fortunately, the option spread has narrowed again with the bid/ask at $1.70/2.00.

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

chart:

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


Dillard's Inc. - DDS - close: 86.44 change: +0.44

Stop Loss: 82.75
Target(s): 89.75
Current Option Gain/Loss: + 4.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
11/24/12: DDS tagged a new all-time high on an intraday basis. Yet shares spent most of Friday's session between $86 and its old high set in early November. If the stock dips there might be short-term support at $85.00 or the 10-dma.

- Suggested Positions -

Long Dec $90 call (DDS1222L90) entry $1.05

chart:

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


Dover Corp - DOV - close: 63.88 change: +0.76

Stop Loss: 59.85
Target(s): 67.50
Current Option Gain/Loss: +21.4%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
11/24/12: DOV is extending its gains with a +1.2% rally on Friday. Shares are arguably short-term overbought here. I would look for a dip back to what should be support near $62.00 soon. However, DOV might make it to $65.00 (potential resistance) before correcting lower. I am not suggesting new positions at current levels.

- Suggested Positions -

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

11/19/12 triggered @ 62.30

chart:

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


Netflix, Inc. - NFLX - close: 82.95 change: -0.05

Stop Loss: 79.25
Target(s): 89.75
Current Option Gain/Loss: - 21.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
11/24/12: NFLX underperformed the market on Friday with a minor loss. Shares spent the day churning inside a $2.00 range. I am not suggesting new positions at this time. The $85.00 level and the 300-dma, also near $85, could prove to be overhead resistance.

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

chart:

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


O'Reilly Automotive - ORLY - close: 92.63 change: +1.08

Stop Loss: 89.95
Target(s): 95.75
Current Option Gain/Loss: + 2.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
11/24/12: ORLY displayed some relative strength on Friday. Shares gained +1.1% and broke through and closed above resistance at the $92.00 level.

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

chart:

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


Pharmacyclics Inc. - PCYC - close: 53.79 change: +1.79

Stop Loss: 49.65
Target(s): 56.50
Current Option Gain/Loss: - 30.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
11/24/12: PCYC surged to new two-week highs with Friday's +3.4% gain. Readers may want to start raising their stops. We are aiming for $56.50. More aggressive traders may want to aim for the $59-60 area instead.

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

chart:

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: 46.43 change: +0.36

Stop Loss: 48.05
Target(s): 42.50
Current Option Gain/Loss: -21.7%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
11/24/12: CRS rebounded off its intraday low on Friday. Yet shares failed to breakout past short-term resistance at the simple 10-dma. The stock is bouncing but the larger trend is still down.

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

chart:

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


Equity Residential - EQR - close: 54.46 change: +0.40

Stop Loss: 55.10
Target(s): 50.05
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
11/24/12: Friday was a quiet day for EQR. Shares did bounce off the $54.00 level but the stock is still poised for a breakdown.

I am suggesting small bearish positions if EQR trades at $53.65 or lower. Our short-term target is $50.05. You may want to aim lower but I am expecting $50 to offer some psychological support.

Trigger @ 53.65

- Suggested Positions -

buy the 2013 Jan $55 PUT (EQR1319m55)

chart:

Entry on November xx at $ xx.xx
Average Daily Volume = 1.69 million
Listed on November 21, 2012


InterOil Corp. - IOC - close: 59.82 change: +0.48

Stop Loss: 61.05
Target(s): 50.50
Current Option Gain/Loss: -27.7%
Time Frame: 3 to 5 weeks
New Positions: see below

Comments:
11/24/12: IOC produced a bounce on Friday but the rebound stalled at round-number resistance near $60.00. The trend is still bearish. Readers could use this bounce as a new entry point to buy puts.

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

chart:

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


CLOSED BEARISH PLAYS

iShares Russell 2000 ETF - IWM - close: 80.47 change: +0.79

Stop Loss: 80.15
Target(s): 75.50
Current Option Gain/Loss: -45.0%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
11/24/12: The oversold bounce in the small cap IWM continues. This ETF is now up five days in a row. Shares rallied past potential resistance at $80.00, resistance at the 150-dma, the exponential 200-dma, and tagged the simple 200-dma. Our stop loss was hit at $80.15 in the process.

- Suggested Positions -

2013 Jan $75 PUT (IWM1319m75) entry $1.53 exit $0.84 (-45.0%)

11/23/12 stopped out at $80.15
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

chart:

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


Vornado Realty - VNO - close: 75.61 change: +0.73

Stop Loss: 75.25
Target(s): 72.50
Current Option Gain/Loss: Dec75p: - 7.1% & 2013Jan$75p: - 7.8%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
11/24/12: We have been concerned that the oversold bounce in VNO might hit our stop. Sure enough, on Friday VNO actually gapped open higher at $75.29, which is above our stop loss at $75.25. This closed out the second half of our positions. We were fortunate that the December put didn't see that much of a move Friday morning.

- Suggested Positions -

DEC $75 PUT (VNO1222x75) entry $1.40* exit $1.30 (-7.1%)

- or -

2013 Jan $75 PUT (VNO1319m75) entry $1.90* exit $1.75 (-7.8%)

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.

chart:

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