Tracking Dykstra's Deep In the Money Options Calls: August 7th

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.

Monday, August 07, 2006

August 7th - CSCO

Dykstra picked the January 12.50 Call for CSCO Cisco Systems Inc.
Read the column here.

Option price: $5.10
Stock closing price on Friday August 4th: $17.24
Approximate premium: 36-cents ($17.24 - (Strike $12.50 + $5.10) = $0.36)

Some volume on the option today already and with the stock up twenty-odd cents, the option is up 40-cents to $5.50 already. This is another earnings report pick as CSCO reports Tuesday. He has been dead on with his last few earnings report picks with TXN and MIXM.

August 9th update - CSCO reported strong earnings and the stock soared. The option traded as high as $7.70 easily beating Dykstra's target of $6.10. Hard to argue with these results!

Tracking Dykstra's Deep In the Money Options Calls

Monday, August 07, 2006

August 7th - CSCO

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