Dykstra: Money Player

My theory is that the Street often overreacts to bad news (perceived or actual) and this overreaction will eventually correct itself as the value of quality companies reasserts itself over time; those who buy deep-in-the-money-calls in advance will be rewarded.

At current levels, Dell definitely fits into that category.

First, recognize Dell is not just a PC maker. The company also provides products and services to build information-technology and Internet infrastructures, including servers, storage, workstations, software, printers and other devices for corporate networks. On the consumer front, Dell's offerings include plasma and LCD televisions, MP3 players and other handheld devices.

Dell is expected to report earnings per share of 41 cents on Feb. 16. A wildcard in this report could be the announcement that new products would use chips from Advanced Micro Devices (AMD Quote). Another reason a turnaround bet should work is the fact that the company should not have three disappointing quarters in a row.

The May $22.50 deep-in-the-money calls at the price of $7.20 (right in the middle of the $7.10 bid-$7.20 ask as of Friday's close) should put us in position to control 1,000 shares of one of the greatest companies in the world for only $7,200 if you buy 10 calls. Remember, if you are not in position to constantly monitor your investment, please put a good-til-canceled (GTC) limit order in to sell your 10 calls at $8.20 or better. That would be a nice win: $1,000! Especially when you are only at risk for $7,200 as opposed to almost $30,000 to buy an equivalent amount of the common stock.

The Game of Life

Undeniably, the pursuit of money drives many of us on a daily basis. In fact, the purpose of this column is to help you to create more wealth. My column is merely a microcosm of TheStreet.com, which is heavily invested in enhancing your wealth.