Dykstra: Harvest Profit With ADM

Stocks made a strong run-up leading into and through the much-anticipated rate cuts by the Federal Reserve Bank; however, yesterday was a different story altogether. The financial sector continues to suffer the negative backlash from the subprime crisis, and after a wave of losses, writedowns and CEO firings, the full extent of these problems has yet to surface.

As stocks continue to move with heavy volatility, option premiums get to be fairly high. Archer Daniels Midland(ADM) deep-in-the-money (DITM) options trade with a very favorable premium. I keep coming back to this stock, because it consistently brings DITM wins, without requiring us to overexpose our hard-earned money.

As many of my regular readers know by now, ADM is one of America's agricultural giants. The company grows, transports and markets a wide array of agricultural products. With the steady increase in the price of such commodities, ADM should enjoy better profit margins moving forward.

Additionally, the company provides investors with an excellent growth opportunity with its ethanol operations. The U.S. will continue to search and explore alternative energy uses, but one proven method already under way is to use ethanol. This sector once enjoyed solid gains on the market; however, investors seemed to have forgotten about the promise of ethanol as a source of energy.

Congress is intent on increasing ethanol usage in the U.S., and in doing so, it is guaranteeing an increase in ADM's profits. As a result, I will take advantage of this situation using DITM options. I will place a limit order for 10 March 30 calls (ADMCF) for $5.40 or better.