Lenny Dykstra
Before we get to this week's pick, let me point out how we finished July. My July 31 pick, Maxim Integrated Products (MXIM Quote - Cramer on MXIM - Stock Picks), hit our $1,000 profit target on Friday.
In response to Maxim's earnings release, the November $22.50 strike, which cost us $7.30, jumped higher and triggered our good-till-canceled (GTC) limit order, set at $8.30. This occurred only because we placed the GTC limit order directly after we bought the November $22.50 calls for $7.30 on July 31. Remember, we are not in this business to buy and hold. We buy and sell at a $1,000 profit, which we ensure by setting a GTC sell order $1 above our purchase price. But just in case our original game plan doesn't go according to the playbook, we give ourselves plenty of time before our in-the-money call option expires. That is the beauty of the strategy; you can get a "quick hit," but it's not mandatory for success because time is on your side. This week, we are targeting the Cisco (CSCO Quote - Cramer on CSCO - Stock Picks) January $12.50 deep-in-the-money calls, which will cost us $5.10 at the most. The symbol for this particular option is CYQ AV. This could be the best risk-reward profile I have seen in a long, long time. It is amazing to me how hated this stock is. Check these numbers out: Cisco has a forward P/E of 14.37, return on equity at a solid 23.06%, revenue of $27.08 billion, total cash of $18.18 billion, and free cash flow at $11.57 billion. (The final number represents the amount of money the company has left after it has have paid all its bills! There is $11.57 billion in free cash flow? What am I missing here?) I want somebody to tell me how this monster of a company can be trading at $17 and change?
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