Dykstra: Slow & Steady

Dow Chemical is a perfect example of such a company.

I did a little research on the history of Dow Chemical; it turned out to be quite fascinating. Here are some facts: Midland, Mich.-based Dow Chemical was formed in 1897 and sells over 2,000 chemical-related products worldwide. Dow Chemical is currently organized into 15 major businesses and is engaged in more than 40 joint ventures. Half of its revenues come from international markets. Dow, which considers itself technology-driven, employs about 4000 R&D people and spends $30 million a year maintaining and supporting its patent portfolio.

In 2005, Dow Chemical had over $45 billion in revenue and produced free cash flow of over $360 million. It has over $3.2 billion in cash on the books.

Bottom line: This company is a monster! That is why I bought 10 June $35 calls Friday for $8.70.

I now control 1000 shares of Dow Chemical all the way until the third Friday in June, which is approximately five months from now. I paid $8,700 for the options vs. $43,170 to buy 1000 shares of common stock. The premium paid (based off of Friday's closing price) to control 1,000 shares of a high-quality stock was only 53 cents. Plus, no matter what happens, the most I can lose is limited to the $8700 dollars I paid for the call option.

That is the definition of what I will be writing about every week: limited risk -- high reward.

Before moving on: The June $40 Wal-Mart (WMT Quote) calls that I paid $6.70 for last week are trading near the same price. But don't be surprised to see Wal-Mart bounce this week: On Saturday, the retailer reiterated its forecast for January same-store sales growth of 3% to 5%.

In closing, I'm happy to announce that soon I will be addressing your emails in a new column here on TheStreet.com. Staying focused on my main goal -- to help you become a winning investor -- I will also soon be participating in a live conference call to discuss deep in-the-money calls. This winning strategy is a consistent way to participate in the thrill of the kill that I call the stock market.

Stay tuned for details and remember: Life is a journey, enjoy the ride!