The name of the game is getting back more value than you give up. When I look to make a trade, I will accept nothing less. It a basic theory that may come as no surprise to seasoned market veterans, but is worth reiterating because a lot of newcomers can be intimidated and lose sight of the basics.
If I am spending real money, I want some sort of advantage that will increase my chances of winning. By buying deep-in-the-money calls, my advantage is that I am getting exposure to the world's best companies at a fraction of the cost of the common stock.
In baseball, finding value in trades and players is a difficult and extremely important task that requires a ton of homework and judgment. Meanwhile, the Phillies and Rays are locked in a holding pattern after rain stopped Game 5 of the World Series last night in the sixth inning with the score tied 2-2.
Today, I will avoid deconstructing the impact of this turn of events. We will find out soon enough as the teams finish the remaining innings tomorrow. A win, and the Phillies are world champions. A loss and the Rays stay alive and are one step closer to climbing out of the 3-to-1 hole they have put themselves in.
However, helping the Phils get to within one victory of the crown has been finding value in new players and then finding a way to add them to their roster. Two great examples are Brad Lidge and Jayson Werth. Everyone knows about Chase Utley, Ryan Howard and Jimmy Rollins. They have also heard about the rise of Cole Hamels at the front of the rotation.
However, Pat Gillick made a few great transactions the last two years that haven't received nearly as much fanfare but have resulted in greatly improved the team.
The first move I want to talk about is the Jayson Werth signing in 2006. Gillick saw a former first-round pick down on his luck and hampered by wrist injuries. A great talent, Werth was finally healthy this season, and Gillick's shrewd decision has paid off.
The second deal that is an important part of the Phillies' season is the trade for closer Brad Lidge. Lidge was nearly unhittable as a pitcher for the Astros a few years ago. Gillick saw a player with amazing skills who was not playing at his potential and was therefore being severely undervalued by his team's front office. The trade looks really good now for the Phils. Lidge hasn't blow a save all year.
The deals made for these players are something I greatly admire because I look for the same opportunities with my picks. I look at companies that have been undervalued and unfairly beaten down by the market. I am able to then trade stock for a company at a great discount while still getting solid results.
The point is that I look to trade stocks at a discount while still getting great results. Some recent pickups that have already paid off include
, my Oct. 22 pick. It filled and sold the very next day for a quick $1,000 win. I bought United Technologies calls at $12 while the stock was trading around $48, paying about one-quarter of the price.
I had my order filled with
at $7.50 while the stock traded at $38. It was my Oct. 20 pick and has already crossed the finish line for a $1,000 victory.
is another example as I bought my options at $8.70 when the stock was at $18. Again, it filled and sold on the same day (Oct. 17) for a quick $1,000 win.
Let's go down the line. Even though
traded at $25, I was able to purchase contracts at $6.70, a huge discount. My pick on Oct. 8, Microsoft brought home a $1,000 win in just three days.
at $8.20 while its stock traded at $17. On Oct. 10, it filled and sold for a $1,000 win.
The Shaw Group
are some of the other recent bargains I found that have turned into wins.
A keen sense for bargains and winners has helped Gillick's Phillies get to the World Series. For me, it has helped me to go 80-0 and earn more than $200,000 in wins since I began
Nails on the Numbers
Lenny Dysktra manages Nails on the Numbers, a subscription service sold by TheStreet.com. He is 80-0 this season on his options picks. Dykstra writes regularly about options trades for TheStreet.com.
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."