Editor's Note:

Stocks witnessed some profit taking this morning but traders were still in a buy-the-dip mode midday.

Current Portfolio:


CALL Play Updates

Armstrong World Industries - AWI - close: 49.90 change: -0.83

Stop Loss: 49.25
Target(s): 54.50
Current Option Gain/Loss: -27.2%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
11/26/12: AWI suffered some profit taking today. I cautioned readers over the weekend to expect a dip. The close under $50.00 is technically short-term bearish and shares did underperform the market's major indices. More aggressive traders may want to use a wider stop loss. Currently our stop is at $49.25.

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: 85.84 change: -0.60

Stop Loss: 82.75
Target(s): 89.75
Current Option Gain/Loss: -14.2%
Time Frame: exit before Dec. 7th.
New Positions: see below

Comments:
11/26/12: Monday started off as a quiet day for DDS. Then this afternoon there was a sudden spike lower but traders bought the dip at its 10-dma. I didn't see any news to account for the spike down but there were headlines out after the closing bell. DDS has announced a quarterly cash dividend of five cents plus a special one-time cash dividend of $5.00 per share. Both are payable on Dec. 21st to shareholders of record on Dec. 7th. Shares of DDS are surging after hours on this and trading above $88. The stock could easily hit our exit target of $89.75 tomorrow.

I am not suggesting new positions at this time.

- Suggested Positions -

Long Dec $90 call (DDS1222L90) entry $1.05

11/26/12 after the close DDS announces a special $5.00 dividend

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


Dover Corp - DOV - close: 63.68 change: -0.20

Stop Loss: 59.85
Target(s): 67.50
Current Option Gain/Loss: +11.9%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
11/26/12: DOV delivered a very mild performance on Monday with shares trading inside a 75-cent range. If the stock were to see any profit taking look for short-term support near $62.00 or its 10-dma.

- 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


Family Dollar Stores - FDO - close: 69.42 change: -0.68

Stop Loss: 68.85
Target(s): 74.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
11/26/12: FDO came close but did not hit our entry point to buy calls. Shares spiked to $70.23 this morning before revering lower. The stock coiled sideways the rest of the day. We'll wait for a breakout and keep our entry point trigger at $70.25. If triggered our target is $74.50. More aggressive traders may want to aim higher. The Point & Figure chart is currently bearish but a move above $71.00 would create a brand new triple-top breakout buy signal.

Trigger @ 70.25

- Suggested Positions -

buy the 2013 Jan $72.50 call (FDO1319a72.5)

Entry on November xx at $ xx.xx
Average Daily Volume = 1.2 million
Listed on November 24, 2012


Netflix, Inc. - NFLX - close: 82.06 change: -0.89

Stop Loss: 79.25
Target(s): 89.75
Current Option Gain/Loss: - 33.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
11/26/12: NFLX was showing weakness this morning with a spike lower but traders bought the dip at support near $80.00. I am not suggesting new positions at this time.

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: 92.46 change: -0.17

Stop Loss: 89.95
Target(s): 95.75
Current Option Gain/Loss: -10.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
11/26/12: ORLY spent Monday consolidating sideways. I don't see any changes from my prior comments.

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: 53.21 change: -0.58

Stop Loss: 49.65
Target(s): 56.50
Current Option Gain/Loss: - 29.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
11/26/12: PCYC stumbled out of the gate this morning with a drop toward $52.00. Fortunately shares recovered and pared its losses. More conservative traders may want to raise their stops. I am not suggesting new positions at this time.

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


Whirlpool Corp. - WHR - close: 102.73 change: +1.70

Stop Loss: 99.40
Target(s): 108.50
Current Option Gain/Loss: -13.3%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
11/26/12: WHR opened at $101.89, spiked up toward $103 and then reversed. I'm not too surprised. I cautioned readers that nimble traders may want to wait for a dip in WHR to buy calls. Today's pullback certainly qualifies or you could wait and see if shares tag round-number support at the $100.00 mark. Our multi-week target is $108.50.

- Suggested *Small* Positions -

Long 2013 Jan $105 call (WHR1319a105) entry $3.75

Entry on November 26 at $101.89
Average Daily Volume = 1.3 million
Listed on November 24, 2012


PUT Play Updates

Carpenter Tech. - CRS - close: 46.32 change: -0.11

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:
11/26/12: CRS is not really cooperating much. Granted the market was up everyday last week and shares have pretty much gone sideways. Traders bought the dip again today. It looks like CRS wants to breakout higher past resistance near $46.50 soon. More conservative traders may want to abandon ship.

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


Equity Residential - EQR - close: 54.43 change: -0.03

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:
11/26/12: EQR displayed some volatility today. The early morning rally failed at resistance near $55.00 yet shares did not hit our entry trigger at $53.65. That could change tomorrow.

After the closing bell it was announced that Lehman Brothers is selling their Archstone property to EQR and AvalonBay (AVB) for $6.5 billion. EQR is purchasing a 60% stake and it looks like EQR is selling new stock to help pay for the purchase. EQR just announced a secondary offering of 19 million common shares. Currently EQR has about 302 million shares outstanding so the secondary shouldn't dilute the stock price too much but it could put additional downward pressure on the stock.

Shares of EQR were seeing a lot of volatility after hours. I would expect that to continue tomorrow. Currently our trigger to buy puts is at $53.65. If EQR gaps open below $53.00 we will NOT open positions.

Trigger @ 53.65 (no positions if EQR gaps open below $53.00)

- Suggested Positions -

buy the 2013 Jan $55 PUT (EQR1319m55)

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


InterOil Corp. - IOC - close: 59.35 change: -0.47

Stop Loss: 61.05
Target(s): 50.50
Current Option Gain/Loss: -41.4%
Time Frame: 3 to 5 weeks
New Positions: see below

Comments:
11/26/12: IOC continues to churn sideways along the $60.00 level. Today's low was $58.88. You might want to wait for a new drop under $58.75 as an alternative 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

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