When team managers are looking for talent, they're weighing the price of a particular free agent against the potential boon he could be to the team's championship aims. Of course, there are other things they consider, like how much time he's expected to spend on the injury list. And then there's the harsh reality that some good, but inconsistent players get sent back down or set free.
In this period of market pessimism, investors have taken many solid companies to the wood shed. In the case of really well-run companies, this is an overreaction that will eventually correct itself. The value of solid companies will reassert itself in time. Subscribers who follow my deep-in-the-money newsletter, Nails on the Numbers, will be rewarded when the market corrects. My system has a win record of 99-1.
In-the-money calls work to our advantage because of the leverage they provide. They give us exposure to a stock with significantly less money at risk vs. a cash or margin purchase for that same stock. Unlike buying a stock with cash, your risk on a call position is limited to the cost to buy the option. And be warned: Buying on margin is a dangerous game that I strongly urge you to avoid.
I generally make my deep-in-the-money picks six to 14 months out from their expiration. If the stock price moves against me, my picks have time to recover. When the stock does move up, as I expect, my in-the-money call is in prime position for a win. I make a profit by specifying a good-till-cancel sell order above the option's purchase price, which takes the guess work out of when to cash out.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV