Dykstra: Getting Back to Basics

Some baseball teams have a style built on speed, enabling them to manufacture runs -- typically, when a batter reaches to get to first, steals second, gets to third on a sacrifice bunt, say, or rounds home on a fly ball.

Speed is a strategy that sometimes works for my deep-in-the-money options trading system, which has a win record of 95-1. Some of my option picks have been known to meet my price target and close out the same day the order was placed. When that happens, my take on the win is $1,000, or $1 per option, because these quick wins do not involve any additional buys of the same option as prices drop.

For positions that remain open much longer, I specify lower price levels at which subscribers may build on the position. This practice lowers the average cost per option. But when a position closes the same day it is filled, that capital is immediately freed up for other investing opportunities.

Picks that have filled in the same day include an initial investment of $6,900 in Microsoft(MSFT Quote) on Nov. 13; $12,000 in United Technologies(UTX Quote) on Oct. 23; $8,700 in Halliburton(HAL Quote) on Oct. 17; and $8,200 in Cisco(CSCO Quote) on Oct. 10.

Other same-day closeouts include an investment of $17,900 in Parker Hannifin(PH Quote) on July 16; $17,100 in American Express(AXP Quote) on May 29; and $12,800 in 3M(MMM Quote) on May 1.

So the return on those one-day closeout positions, excluding broker fees, ranged from 5.59% to 14.49%.