So much for the strong start to the new year. Just a week ago, we were looking at some promising market gains. Now it appears that early momentum was not to last.
From Dec. 29, to Jan. 6, the
rose 10%, while the
Dow Jones Industrial Average
gained 6%. But Wednesday's retail and manufacturing figures slammed the markets, with the Dow down 2.9% for the day and the Nasdaq losing 3.7% -- both finally falling back to mid-December levels.
In a volatile market, down days will be countered with up days. And when that happens, I win with my deep-in-the-money call strategy. My picks have given me a record of 94-0.
You can still make money in this market, as I've shown consistently with numerous successes during the bear months of October and November when the Dow was scraping the barrel at $7,500. Those months saw volatility that helped readers following my strategy take gains on up days.
For example, practitioners of my DITM strategy booked $3,100 in profits on Oct. 17 with wins on
And on Nov. 4, a couple of wins on
netted us $11,750. Then on Nov. 24, we won another $5,100 with bets on
December alone brought us $16,400 on names like
Now 2009 is off to a blazing start, with gains of $6,800 just halfway through the month. And with nine open positions, our bases are loaded for the market's next rise.
How much subscribers make off my system depends upon how much they want to put into it. That brings me to a basic question many readers ask:
How much money do I need to start following your trades?
How much do you have? While that sounds like I'm joking, I am partly serious. In reality, how much you need completely depends on whether you have enough to get started. With my DITM calls strategy, you do not need to follow every trade and you do not need to purchase the same number of contracts that I specify. You can buy more or fewer.
Keep in mind that for each contract purchased, you will typically make $100 with each win. Buy one contract, and a win will net you $100. Buy three contracts, and your take is $300. Buy 27 contracts and a win will net $2,700.
The percentage gain or loss -- before commissions and fees -- on your trades will be the same regardless of how many contracts you buy. So even though buying more or fewer contracts will net you a proportional gain/loss in dollars, the percent gain/loss remains the same: If I make a 30% profit, so will you. If I make 250%, so will you. The trading strategy allows you to increase your take on the same pick by buying more contracts. The dollars might be proportionally higher or lower, but the investment period will be the same.
Now, how much do you have to commit?
If you trade one contract at a time and follow every pick, I'd recommend a starting balance of at least $30,000, with an additional reserve of $10,000 to $20,000. Do the math for each additional contract you want to trade for each pick. Scale up for more contracts and scale down for fewer picks.
These are courtesy guidelines, and are provided without a guarantee of wins or profits.
Lenny Dykstra manages Nails on the Numbers, a subscription service sold by TheStreet.com. Mr. Dykstra is 94-0 in his options picks. Click here for a free trial to Nails on the Numbers. Mr. Dykstra writes regularly about options trades for TheStreet.com
(At the time of publication, Dykstra had no positions in the stocks mentioned.)
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."