Dykstra: Re-Buys Pay Off

Manny Ramirez's deal with the Dodgers Wednesday seems to have come down to deferred salary. After a great partial season with Los Angeles last year, Manny finally got the $45 million he's been seeking and that he'd turned down at least once before.

Terms of the latest two-year offer were a bit more advantageous, enabling Ramirez and the team to come to an agreement. He found a groove with the Dodgers last season, hitting .396 with 17 home runs in 53 games. No question, the Dodgers wanted him back in a bad way.

Now, let's get to a question from a subscriber to my Nails on the Numbers newsletter about my deep-in-the-money call options trading system. My system's win record is 95-1, and I'm just getting started.

Could you expand on your methodology a bit more? For example, please explain time limits on buy orders, or the criteria you use for adding to existing positions.

As a general rule, with each recommendation I make I tell subscribers to purchase 10 contracts of a specific option at a specific price, using a limit order on price and duration. On Monday when I instructed you to buy 10 contracts of the January 2010 Cameron International(CAM Quote) $12.50 call (YXXAV), paying $7.80 or better, I specified the call; the limit on price -- $7.80 or less; and duration -- limit your trade to automatically cancel at the end of the trading day if the order is not filled.

Similarly, when adding to open positions, readers need to understand and watch the scorecard, which is available exclusively to Nails on the Numbers subscribers. When the underlying asset -- the stock -- reaches a re-buy level as listed in the recommendations section, 10 additional contracts are recommended at this point. With this purchase, I recommend a "market order," meaning subscribers should add to the position at the going price rather than waiting for an option price recommendation.