This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Dykstra: Take Time to Readjust

Stocks in this article: CAM GLW CSCO

The time element is crucial to my deep-in-the-money call options-picking system. With Tuesday's win on Cameron International (CAM - Get Report), my system -- which you can follow through my Nails on the Numbers newsletter -- has a win rate of 96-1.

I'm very proud of that record, which should cross the 100-win finish line in the next month or two, depending upon market behavior.

Nails on the Numbers

Time allows me to adjust a position to market conditions. My picks are not set-it-and-forget-it investments. If a pick's underlying price goes down, I must adjust through re-buys at lower prices.

By adding to my position, I lower the average price per contract. This repositions me for a better chance at a win. It helped with my Jan. 6 win on Corning (GLW - Get Report), which was a $7.50 call option that stayed in play for 62 days before paying out $5,800.

During that time, we added 50 contracts to the initial 10 -- building on our position but lowering our average cost. We had until January 2011 to close out the Corning call. But in a recession, we want as much cushion as possible against an extended bear market. We're all waiting for that bottom.

The same Corning position we've already closed on is now going for $5.45 at the mid-point -- more than $1 above my average cost per share on those 60 contracts. But in a volatile market, we pay more for that extra year of cushion: The January 2010 $7.50 call position is going today for $4.80. So in choosing my position, I balance higher cost against the safety cushion of more time.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,164.95 -251.90 -1.45%
S&P 500 1,994.99 -26.26 -1.30%
NASDAQ 4,635.24 -48.1670 -1.03%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs