Winning isn't everything, it's the only thing. However, in order to win, you need to know the ground rules first. Readers of my newsletter,
Nails on the Numbers
, have a big advantage. My system has led me to an 87-0 record in 2008 while taking $226,550 to the bank since I began the service in March. Readers that have followed along have had access to the info on all my trades.
I get questions all the time from people interested in learning more -- both subscribers and people that are considering subscribing. Here are some of the most common questions that I have received recently:
: I don't have the time to keep an eye on the TV while I am at work. How can I keep on top of my trades without watching the ticker all day long?
: Most days I will watch the market very closely, but there are days when I have to travel to another city or will be in a business meeting while the market is open. I obviously can't stay glued to the TV all the time.
Many of my readers check the stock price several times a day or even at the end of the session. The key is to watch for the "Next Buy" levels in my Stat Book. Some people place their limit order for the option right when it hits that next buy level. Others that check the market activity less frequently will place the order later. They may actually end up getting a better price than those who bought immediately -- that is if the stock continued to fall. They may also have missed their opportunity.
The best way to stay in step with me is to stay as close to my trades as possible so that my thinking makes sense for your trades as well. However, if you keep your average purchase price in step with mine, or keep yours even better, you should be fine.
Just keep in mind that my next buy levels are reviewed daily. It is important to always keep tabs on them.
: In your newsletter, do you give detailed instructions on how to work the intricacies of options?
: Yes, of course I do. I try to keep my system simple, so I don't get bogged down in a ton of technical terms. There is no need. I try and explain my thinking and point to the data I'm reviewing. I tell readers when I am buying an option and when I sold it. I tell them when I am adding to a position.
My newsletter goes into detail about each pick, while some of my past columns, particularly those from late June and early July, are good reads for brushing up on the basics.
: What's the upside of your Deep in the Money (DITM) technique and what's the downside?
: The upside is that my strategy that has led me to 87 straight victories this year. I get to trade big companies at the fraction of the cost since I am trading so deep-in-the-money. This allows me flexibility to be in many different positions. The only downside is that the options have expiration dates. Once the date is reached, the option is worthless. So, I must achieve my win before that expiration date. However, I like to pick options that have expiration dates that are very far out -- most of my picks lately have been for options that expire in January 2010 or later. I have just two that are set to expire before that -- one in January 2009 and the other in April 2009.
: How did DITM calls became your forte?
: I had given a financial advisor I hired $2 million of my money to invest for my retirement. He lost all but $400,000. That was my wake-up call. I was humiliated, and I walked away vowing never to let that happen to me ever again. I knew I had to take matters into my own hands.
There was money to be made in the market, and once I learned the intricacies of different strategies, I liked trading DITM calls the best. It allowed me to invest only a portion of my portfolio while still making big gains. It allowed me to make the best use of my money.
The proof is in the pudding, so to speak. All my hard work has been paying off for me this year. I am 87-0 and have netted big wins recently despite a fluctuating market. Here are some of the wins:
Deere & Co.
Always remember: Life is a journey, enjoy the ride
Lenny Dykstra manages Nails on the Numbers, a subscription service sold by TheStreet.com. Mr. Dykstra is 87-0 in his options pick this year. Mr. 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."