This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Dykstra: Soldier On

Deep-in-the-money calls are the perfect investing tool for a volatile stock market. For those of you who have been using my deep-in-the-money calls strategy, you know I prefer to go out four to six months with our strike price. Because of the time we give our picks to make a move up, our chances of executing a winning trade are improved tremendously, thereby improving the risk/reward profile.

This week, we focus on General Dynamics' (GD - Get Report) November $55 deep-in-the-money calls, which I'm looking to buy for $11.50 or better.

For the simple reason that this particular option hasn't traded in a while, I am only going to add a small "premium" to the stock price. General Dynamics closed Friday at $66.12; let's see if it comes in.

There is no reason to chase anything in this roller-coaster of a market. Until things calm down, we need to find companies that will alleviate the daily pain we have been experiencing with these massive market swings. This market is so volatile right now, it's downright scary! That is why we are going to buy the General Dynamics deep-in-the-money calls.

When market conditions are this unpredictable, a company needs to have a weapon to keep the "operators" from taking their stock down. Otherwise, it will get pummeled in an environment like this. In other words, we need to find companies that are buying back their stock. General Dynamics plans to buy back up to 10 million shares, or 2.5% of its outstanding stock.

Also, let me add that General Dynamics is arguably the premier defense contractor in the world. Bank of America recently boosted its profit estimates and raised its price target to $73. This is a company that has about 72,000 employees; it produced about $22 billion in revenue in the past 12 months. General Dynamics has a forward P/E of 14.31, return on equity of 18.87%, and to top it off, it has $1.70 billion in free cash flow. Remember, that's after it pays all its bills. This is the definition of a "major league" company!

The Game of Life

Speaking of the big leagues, certain sporting events are intricately linked with certain holidays. The Sunday of Memorial Day weekend is synonymous with the Indianapolis 500. Fourth of July weekend is synonymous with breakfast at Wimbledon. Labor Day weekend is synonymous with tennis' U.S. Open at Flushing Meadows. And so it is that Father's Day is synonymous with the U.S. Open Golf Championship.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
GD $140.52 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs