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Dykstra: My Favorite Trades
There are many good ones to choose from, but if I had to pick just one I would say
is my favorite. I have picked this company twice this year. The first time was on May 21, and that pick turned in a $13,200 win after 72 days. The second time I picked it -- on Sept. 17 -- I went all the way out to January 2010 and selected the $7.50
The market got smoked last week. People were scared. They sold and sold, and the stock was punished unfairly with the rest of the market. The CEO of the company went on television, and I liked the plan he laid out. I knew this company was trading at an absolute steal. I was right. The very next day I won. I had invested just $5,000, and one day later I had a $1,000 profit on the trade.
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Mad About Options: Sept. 23
Jud Pyle and Matt Buckley review Jim Cramer's recent comments about
Barrick Gold Corp
and offer an appropriate options strategy.
Pyle: "What's going to happen is,
U.S. Treasury Secretary Henry Paulson is basically going to create inflation. He's going to pump a lot of money into the system. Inflation goes up, value of the dollar goes down, gold has to rise... So one thing
strategy we're looking at here
with Barrick Gold is covered put sales... It's very similar to a buy-write, where the investors buy the stock and sell an upside call. Instead of buying the stock though, they just go out and they sell a put. In this case, October 37 and a half puts for $2.85. They
investors sell that. What do I mean by covered? What's the most they can lose there? The breakeven is $34.65 or higher, so the investor takes the $34.65, puts in an account
and forgets about it. So it's completely covered. The liability is covered."
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Option Traders Find the Bailout to Be Baleful
Implied volatility in
options rose 23.4% to 67.4% (vs. 97.5% historic), making it one of the day's
Sept. 22 top volatility gainers, as shares slid nearly 10% to $42.47.
Most of the 40,500 options in play today are trading in the front month and in
of 42.50 and above -- a look at the premiums paid suggests that call buyers may be buying these calls on the dip in premiums of as much as 40% today. As for where we'll see JPMorgan shares venture between now and Oct. 17, front-month options suggest as much as a $6.30 move (14% of the current share price), a prospect that could turn many option traders into sellers of volatility at these levels, as we suspect some traders are doing by selling
at the 40 and 42.50 strikes.
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This article was written by a staff member of TheStreet.com.