Dykstra's Deep-in-the-Money Call: Valero

The refining company's January $35s offer a compelling trade in the brutal market.
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When others are seeing red, I'm seeing green.

While the market has been getting beat up, there have been a lot of buying opportunities and I've had some winners cross the plate. This week

Procter & Gamble

(PG) - Get Report

notched us a $1000 win, and we scored a grand with



and $4800 with



last week.

It's an important part of my strategy to average down, or lower my average entry price when a pick goes down and you can check out my recommendations for managing my picks in my newsletter.

I have a great play for you today, so let's move right into the pick. I'm going with


(VLO) - Get Report

. I grabbed a one-day, $1000 win with Valero a few weeks ago, and the current price puts me in great position to grab some more cash.

The company is the biggest independent oil refiner in North America. Valero refines low-cost residual oil and heavy crude into cleaner-burning, higher-margin products, including low-sulfur diesels. The company operates 17 refineries with a total production capacity of more than 3.1 million barrels per day.

The company markets its products in 44 states, as well as in Canada, Latin America and the Caribbean. It has more than 5800 retail and wholesale stores and operates under many brands including Valero and Diamond Shamrock.

Simply put, this company's stock is way too cheap! It has lost 40% of its value in the last year and 10% in the last week. It closed at $44.68 on Wednesday. That's just a buck and a half above its 52-week low of $43.06. Its ceiling during that time frame is $78.68.

Part of the decline in the last week can be attributed to a drop in gross refining margin across the industry. However, this company has a return on equity of more than 20% and nearly 80% of its stock is held by institutions, which are generally considered buy-and-hold investors.

At today's price, Valero is an absolute steal.

That's why I am placing a limit order to buy 10 January $35 calls (VHBAG), paying $10.90 or better. I will place the GTC sell order $1 higher than the fill price so I can grab a $1,000 victory as soon as it comes. So, if your order is filled at $10.90, you should immediately place a good-till-cancel (GTC) order to sell at $11.90.

Always remember: Life is a journey, enjoy the ride!

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."