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Editor's Note: Jim Cramer's column runs exclusively on; this is a special free look at his column. For a free trial subscription to, click here. This article was published Nov. 27 on RealMoney. Sometimes you are so steeped in "high priest" language that I can't figure out your message. For instance, what do you mean by " I hate the telegraphed side of any equation. They were too rich." Pardon my ignorance.

-- Jim G.

Darn it all, Jim G., you are right. I often lapse into the jargon of the business, the argot, and unlike in plays or movies, it matters, because I am talking about real money.

So let me translate and give you the textual analysis of those two lines because they explain much of the way I think as a trader. The reference was to a possible trade I considered yesterday, after the third-straight televised report ran about how

Home Depot

(HD) - Get Home Depot Inc. (The) Report

will guide estimates down and growth rates lower. That's the "telegraphed" portion of the phrase.

Telegraphed in stocks is like telegraphed in boxing or baseball. If you know the signs in baseball, you know what pitch is coming. If you're a boxer and you always feint right before hitting left, you are telegraphing that left.

In the news business, bearish and bullish hedge fund managers call folks such as Maria Bartiromo, Bob Pisani and Tom Costello all day and offer views of what they should say. If you don't think this happens, you are clueless. If you are short Home Depot, you want the stock lower. So you call people like Bob and Maria and tell them all about how HD is going to crater at the meeting.

The talking heads telegraph the trade for you. So many people are making the same trade, though, that the stock gets knocked down

in advance

of the meeting. In fact, in the hedge fund game, you go with the bird in the hand. You don't wait for the actual statement from Home Depot -- that's too risky.

You get short ahead of giving your word to the press and then you cover on the press's negative comments. That's the easy money, much less risky than actually betting on what the company will really say. It's way too dicey to wait to hear if Hot Dog, as Home Depot is called, broadcasts genuinely negative news.

In other words, the "equation," or the situation that is telegraphed, might be "in the stock" after the press does the bears' bidding. (There is nothing wrong with this. What are they supposed to do in the press, read press releases from Home Depot?) Therefore, I want to leap to the opposite situation: What happens if Home Depot doesn't say anything negative? Given that you now have a lot of uninformed people listening to the media and taking action, perhaps even shorting HD or buying puts after the story's been telegraphed, I want to game the long side; I want to think about buying HD.

But I don't want to buy common; that's too risky. I want to buy calls instead of puts. Why calls? I want to limit my capital risk. Frankly, I am not a big fan of Home Depot; I like


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TheStreet Recommends

(LOW) - Get Lowe's Companies Inc. Report

much more. I don't want to risk that Home Depot

actually does

what the bears say, because if it does, the stock has another point or two of risk to it before the mindless buy reiterations get launched by the toady analysts who cover Hot Dog.

So I hit up my screen that depicts the prices of call options. I hone in on the December 45 calls, and wouldn't you know it, with the stock at $43, they were priced at $1.25. That's way too rich -- there's that phrase, meaning that the market has bid these calls up to well beyond what I think they are worth. If the calls were 5/8ths of a dollar, I might have wanted to take the bait. (Remember, this is all a theoretical exercise; I can't buy calls anymore. But I can still price them.) I don't like to risk more capital than that on a hunch that the meeting won't go that negatively.

Why were the calls priced at $1.25? It's not because of the Black-Scholes model or any of that fancy stuff. They were priced so expensively vs. what would make the trade work because there are a lot of people at a lot of funds who are thinking

just as I do

. They sit there and think about what could go right now that the "dumb" press has been filled in by the "smart hedgies."

That's right, talk about

Heisenberg. The actual act of seeing this negative exchange by the press causes the smart money to want to be bullish. You not only have to anticipate the opposite occurring, but you have to anticipate that too many people have anticipated that the opposite will occur, which is why those calls were at $1.25 and not 5/8ths.

The market is a remarkable animal. It's as smart as an owl, able to see in the dark, and needs to eat 10 times its body weight in foolish money every day to stay healthy.

So, in the span of maybe 12 seconds I thought of a contrary trade, decided it was too expensive, meaning the risk outweighed the reward, and tossed it into the mental wastebasket. My throwaway note reflected that time spent. But only if you are a practitioner of the game at the level I played -- hey, I think post-Motley Fool we are realizing that there are different levels of the game -- would you know this stuff. That's no sin. Professional chess masters beat amateurs all the time and nobody thinks the

Securities and Exchange Commission

should get involved!

I will try to be more clear next time.

James J. Cramer is a director and co-founder of He contributes daily market commentary for's sites and serves as an adviser to the company's CEO. Outside contributing columnists for and, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column to