June 5th 2006 - HW

Dykstra picked the August 22.50 Call for HW Headwaters Inc.

Option price: $4.60
Stock price: $26.32
Approximate premium: .78-cents

The stock traded to a high of $26.86 on June 6th 2006, a gain of $0.54.

If 10 contracts were purchased:
Would the minimum of $1000 been made: No, not yet
Maximum gain potential as of June 16 is: $540

June 21st Update - Stock was up $1.12 today, but still below the price of $26.32 where the option was recommended. The last trade and bid are at $3.90 and the ask is at $4.10.

June 26th Update - HW closed up .60-cents today at $25.47. The option last traded at $3.70 with a bid of $3.80 and ask of $4.00. Still well below the purchase price of $4.60. So the stock goes up .60-cents but the option only .10-cents? Not a great sign, possibly due to some new debt the company is looking to help pay down a senior secured credit facility? No mention of an average down yet from Dykstra that I have seen.

June 29th Update - HW closed up $1.27 to close at $25.30 (the high for the day). The option last traded at $3.50 with an ask of $3.60 and bid of $3.50. The stock is down about a dollar from the recommendation price as is the option price.

July 17th Update - HW is getting hammered and is trading at $21.63, well down from when the option was recommended. The option is trading at $1.25, down from $4.60 and is now out of the money. About 1 month to go, but a lot of ground to make up in a shaky market.

August 18th Update - The option expired today at $0.05 after the stock closed at $22.31. The option never gained $1 in value to get the desired gain.