Dykstra: United Tech Options Play Looks Good

As the market continues to yo-yo, the increased volatility has helped push the total deep-in-the-money wins over the $100,000 mark in less than six months of trading. Yesterday, both Wachovia (WB Quote - Cramer on WB - Stock Picks) and Merrill Lynch (MER Quote - Cramer on MER - Stock Picks) scored wins on a day when each stock spiked, then dropped significantly.

These wins are excellent examples of why it is so important to place a good-till-canceled (GTC) order immediately after a purchase is filled. If we had to monitor these stocks all the time, we could easily miss the opportunity to lock in our profits.

Another example of the importance of placing GTC orders brings us to today's pick. Once again, I am returning to the well with United Technologies (UTX Quote - Cramer on UTX - Stock Picks). United Technologies was featured in the column on March 15 and on April 12. In both cases we bought, the order was filled, and then we sold for quick gains. The March 15 purchase yielded a win in three days, and the April 12 purchased topped that with a one-day win.

In the past week of market uncertainty, United Technologies, like many solid companies, was hit, and the stock dropped from $77.40 to $72.97 at yesterday's close, making it once again attractive for my deep-in-the-money (DITM) calls strategy.

The company gets 60% of its revenue from abroad; this provides increased stability should the U.S. economy slow down. In addition, yesterday Pratt & Whitney, a UTX unit, announced that it won a $1.3 billion contract from the U.S. Air Force covering new F-119 engine deliveries from 2007 through 2012.

The numbers don't lie: The company reports revenue of over $51 billion and has $3.49 billion in free cash flow, and an outstanding balance sheet. Plus, on July 18 the company reported second-quarter profit and revenue figures above analyst estimates. It also raised its earnings and revenue outlook for the year.

United Tech is an obvious play. I will place a limit order to buy 10 DITM calls using the month of November, with a $60 strike (UTXKL). I will pay $14 or better.

Always remember: Life is a journey; enjoy the ride!

Now, as we do every week, it's time for accountability.