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.
Dykstra picked the June 40 Call for WMT Wal-Mart Stores Inc.
posted by CramerTracker @ 6/08/2006 10:15:00 p.m.
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