Dykstra: Growth in Store

The ascent of EMC's stock preceding earnings may have been the reason for a slight selloff after the great earnings report; however, that should only be a hiccup on this stock's path higher. With its strong earnings, impressive growth overseas and impending spinoff of VMware, EMC provides a great DITM play. I am going to use the October 12 calls (EMCJN), placing a limit order to buy 10 contracts at $3.90 or better.

I always like to have an idea of who else is invested in the stocks I buy. On Stockpickr I can see exactly which funds and pros choose particular stocks, as well as who has purchased the stock recently. I can see that EMC is owned by several large funds, and I can also look at which other stocks investors in EMC own, which often include Cisco(CSCO Quote - Cramer on CSCO - Stock Picks) and Comcast(CMCSA Quote - Cramer on CMCSA - Stock Picks).

Speaking of Comcast, the company reported very strong earnings Thursday, yet the stock declined. This also may have had some to do with its steady rise throughout April. The stock received a nice premarket pop after the announcement early yesterday, but it opened lower and then proceeded to decline throughout the day. Look for Comcast to regain its traction and once again continue to rise.

Fielding Reader Email

Hello, Mr. Dykstra, congratulations on your huge Amgen(AMGN Quote - Cramer on AMGN - Stock Picks) win! I remember watching you play ball, and you were great. Even though I am a die-hard Twins fan, I have to give you your due. But as an investor (and a teacher) you have found something that your excel in even more than baseball! Thank you. Now for my question: How do you decide what to pay for the contract? I understand (and agree with) your strategy and have followed you daily since you started writing again. But I cannot figure out how you decide on the entry price.

Thank you for your kind remarks, Amgen was a very exciting win. I have been fortunate enough to enjoy success as an investor and baseball player but cannot declare one better than another. There's something about the rush of a very successful trade that puts me right back on the diamond. In buying an option, I choose to buy the calls when the underlying stock price reaches a certain buy level. There is no exact formula for exactly what price I will place my GTC buy. However, I generally base my price off of the previous day's close and make my maximum limit order equal to the closing bid.

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