Dykstra: Flexing Call Strength in Flextronics

As market conditions change, we need to adjust our open orders accordingly. Case in point: My pick from Wednesday, BigBand,(BBND Quote) ran up heading into its earnings report, and our order did not fill. I will cancel the good-till-canceled buy order today before the market opens.

BigBand came out with disappointing earnings, and as a result, we are to remove our GTC. It's very important for interested readers to check the column frequently for our open orders.

On Thursday, Komag(KOMG Quote) also hit its next buy level at $27.50, giving us 10 more contracts of the September 25s (QKXIE) at $4.60. I address the dollar-cost averaging with Komag more below in the comments section. The buy level was noted in this week's Stat Book Scorecard on Wednesday.

Readers should also take note of the changed GTC sell order for Comcast(CMCSA Quote) in the Stat Book. In my Feb. 7 column , I wrote in favor of purchasing the Comcast July 35 calls (CCQGG) for $8.60 or better. After dollar-cost averaging and a 3-for-2 stock split, I have control of 4,500 shares of the common stock at an average cost of $4.56 and with an option strike price of $23.375.

After the dollar-cost averaging and the stock split, my risk is greater than what I typically target for deep-in-the-money (DITM) calls. Comcast has almost hit my GTC sell order on several occasions. However, I believe the time has come to take a "bird in the hand" and close it out at $5.30 for a $3,000 win.

Now let's get to the next play.

With earnings season in full force and stock market volatility at its wildest, I believe now is the time to invest in companies whose earnings neither blew it out nor disappointed. Flextronics(FLEX Quote), an electronics manufacturing service provider, reported earnings of 20 cents per share for the fourth quarter, marking a 182% increase over the year before. At its present price, the stock is trading with a forward P/E of 10.91 and a five-year expected PEG of 0.61. The PEG provides investors the ratio of P/E to growth, an indication of the stock's value relative to its growth.

At its close Thursday of $11.67, Flextronics offers both great value and rapid growth. The company generates over $18 billion a year in revenue annually and trades at a price/book ratio of 1.13. Furthermore, the deep-in-the-money (DITM) calls are a cheap investment with a premium of only 33 cents. I will place a limit order for 10 contracts of the October $10 (QFLJB) at $2.00 or better.

Now let's get to this week's reader emails.