Dykstra's Deep-in-the-Money Call: Yahoo!

As investors sent Yahoo! shares plummeting in the aftermath, I'm seeing this as a buying opportunity. I continue to believe this deal will get done

Yesterday, shares of Yahoo! got absolutely ripped, trading as low as $22.52 before closing at $24.37. That represents a 15% drop in share price. Volume was off the chart. However, shares of the company are still above their 52-week low of $18.58 and well ahead of the $19.18 the stock traded at on Feb. 1 before the bid was announced. However, it's also well off its highest point in the last 12 months, which was $34.08.

I like this pick for a number of reasons. First, as I said above, I strongly believe this deal between Microsoft and Yahoo! will get done. The deal appears dead at the moment, but that doesn't mean it is. If that happens, shares could bounce right back.

Furthermore, Yahoo! is reportedly exploring an advertising partnership with rival Google(GOOG Quote) and also looking at Time Warner's(TWX Quote) AOL Internet unit.

Yahoo!'s CEO, Jerry Yang, is taking a beating right now, so he will make one of the moves in the near term. I like Yahoo! as a Web site, which leads to my decision to pick the Internet service provider as my DITM call this morning. I will place an order to buy 10 DITM calls going all the way out until January, 2009. I will place a limit order at $9.90 to buy the January $15.00 calls (VYHAC). This should leave plenty of time for things to shake out. If the order is filled, don't forget to place a GTC (good till sell) order $1.00 above the fill price ($9.90 is the fill price so $10.90 will be the sell price) to capture the $1,000 dollar gain.

Always Remember: Life is a journey, enjoy the ride!