Dykstra: Eastman Chemical Calls Brewing

The Fed knocked one out of the park yesterday, and investors cheered and opened their wallets in celebration. Yesterday's highly anticipated interest rate cut announcement and subsequent market surge demonstrate just how quickly investors are willing to put their money back in the game.

Before the party's over, I plan to add to a few open positions while the deep-in-the-money (DITM) calls are still cheap. I am going to place the following market orders at the open today:

Motorola(MOT Quote) October $15 (MOTJC) -- 40 contracts.
Precision Drilling(PDS Quote) December $22.50 (PDSLX) -- 30 contracts.
Methanex(MEOH Quote) October $20 (QPNJD) -- 40 contracts.
Massey Energy(MEE Quote) October $20 (MEEJD) -- 30 contracts.

These buys will give me a much lower cost basis in these positions, and they will be in much better scoring position -- literally.

Now, let's move on to today's play.

Eastman Chemical(EMN Quote) has developed into a major producer of chemicals, fibers and plastics. Among Eastman's operating segments are its CASPI (coatings, adhesives, specialty polymers and inks), specialty plastics (engineering polymers) and fibers (acetate tow and textile fibers) units.

Its performance polymers segment is the No. 1 maker of polyethylene terephthalate (PET), a plastic used to make packaging for soft drinks, food and water. The last segment manufactures performance chemicals and intermediates. Eastman's products go into such items as food and medical packaging, films and toothbrushes.

Eastman Chemical is also the proud owner of a solid balance sheet. The company has a forward price-to-earnings ratio of 13.91 and an ROE coming in at 18.50%, and its total debt-to-equity is an impressive 0.771. To finish it off, it has free cash flow of $208.50 million.

This leads me to select this stock as the DITM call play today. I will place a limit order to buy 10 March $55s (EMNCK) for $11.50, or better. I'll use limit orders.

Now, as I do every Wednesday, it's time for the real numbers in the Stat Book. This is my 149th column for TheStreet.com. I play to win -- that's the bottom line.