The past two weeks have been good ones for my Nails on the Numbers subscribers. Last week, my deep-in-the-money options trading system won four times. The four options positions that crossed the finish line added $11,150 to my win column.
Then Wednesday, my position in
, my Jan. 12 pick, won a whopping $15,750 on 160 contracts. It's the biggest single win on my scorecard to date. I had two $13,000-plus wins last summer. Quicker wins of $1,000 to $2,000 are more typical.
Last week, my quadruple win opened with a $1,000 payout on
on its third trading day in play. Then on April 14, I closed out an extended position in
, a Sept. 8 pick, into which I'd put $123,000 over time in an effort to bring down its average cost. Intel's big drop since the market crash had put the position in jeopardy. But I managed it carefully, bringing my average costs within reach until the market gave me my win.
Also on April 14,
paid off $2,000 after 27 calendar days in play. My position in
closed out April 16, putting another $1,000 into my win column on its ninth trading day.
The last time my system rang the bell four times in one week was in early October, for a $5,000 payout. But more are on the way: I have seven open positions and am buying more all the time.
On my Dow position, I averaged down from an initial cost per share of $6.80 by buying additional contracts as the share price dropped. That brought my final average cost to $3.10 a share, enabling me to close out my position yesterday.
Many of my subscribers were anxious to see how I would play out the Intel position. The stock was trading in the $20s when I bought the $15 calls in September. The position turned into a nail-biter after the bottom dropped out of Intel. Global markets crashed Oct. 10, pushing my position out of the money.
My system buys DITM positions to avoid situations like this, but I still have ways to get out of a tight corner brought on by such extraordinary events. I took action, making repeat buys on my options position at the new, lower prices, which lowered my average costs. But by February -- with an April 17 expiration looming -- the market still had not exceeded my average cost, which would have enabled me to cash out. It was time to get serious.
On Feb. 9, I instructed subscribers to double down. I bought 410 contracts, bringing my total to 820. This lowered my good-till-cancel sell price to $2.00 -- still too high for the market, but now within reach. And I continued buying.
On Monday, April 13, with my average costs at $1.40 a share on 880 contracts, I alerted subscribers to sell at $1.50. I walked away with a $7,150 profit.
And I put another notch in my win column.
At the time of publication, Dykstra had no positions in stocks mentioned.
Nicknamed 'Nails' for his tough style of play, Lenny is a former Major League Baseball player for the 1986 World Champions, New York Mets and the 1993 National League Champions, Philadelphia Phillies. A three time All-Star as a ballplayer, Lenny now serves as president for several privately held businesses in Southern California. He is the founder of The Players Club; it has been his desire to give back to the sport that gave him early successes in life by teaching athletes how to invest and protect their incomes. He currently manages his own portfolio and writes an investment strategy column for TheStreet.com, and is featured regularly on CNBC and other cable news shows. Lenny was selected as OverTime Magazine's 2006-2007 "Entrepreneur of the Year."