Tracking Dykstra's Deep In the Money Options Calls: February 13th 2006

Tracking Dykstra's Deep In the Money Options Calls

A Blog that tracks Lenny Dykstra's deep in the money option picks from his column featured on thestreet.com's website. His "Low risk - High reward" system is looked at to determine how successful it is. The strategy involves picking good companies where the stock price is too cheap and buying deep in the money calls for several months out. The call prices will tend to go up dollar for dollar with the stock price since they are already "in the money". Dykstra buys 10 calls and looks for the stock to go up $1 dollar for a $1000 gain. He stresses that this is a short term strategy and to take profits when they come. The "maximum gain potential" is listed just to give an idea of how high the option price could have gone, but profits for this system should be taken as soon as they are made. I don't want to imply that one should wait for bigger gains.

Thursday, June 08, 2006

February 13th 2006 - NBR

Dykstra picked the June 30 Call for NBR Nabors Industries Ltd. ***There was a 2:1 stock split so it was actually the June 60 Call so all numbers have been cut in half here.

Option price: $7.25
Stock price: $36.55
Approximate premium: .70-cents

The stock dropped and Dykstra recommended to average down when the stock was at $33.55 on February 21st 2006.

Option price: $5.25
Stock price: $33.55
Approximate premium: $1.70

The stock traded to a high of $40.71 on May 11th 2006, a gain of $7.16 when buying on the dip and $4.16 if bought when the stock was at $36.55.

If 10 contracts were purchased:
Would the minimum of $1000 been made: yes - for both recommendations
Maximum gain potential: $4160 -> $7160

Tracking Dykstra's Deep In the Money Options Calls

Thursday, June 08, 2006

February 13th 2006 - NBR

0 Comments:

About Me

Previous Posts