Editor's note: Lenny Dykstra will explain his deep-in-the-money calls (now 70-0 for the year) at TheStreet.com Investment Conference on Saturday, Oct. 25. Click for details.

I may have a perfect record with 70 wins and zero losses this season, and I may make it look very easy at times. The truth is that I put in a lot of hard work so that it is as easy as possible for my readers. In the end, though, it's worth it. The system works -- in both up and down markets -- and the proof is in the pudding, as they say.

I tell readers all the time that it is important to follow the rules. I have gotten a number of questions lately about two of the rules, so let me explain them in a bit more depth.

Nails on the Numbers

First, my strategy calls for buying deep-in-the-money calls. I usually pay a premium of $1 or less to purchase these options contracts. Sometimes it's a little over a dollar, but it doesn't happen all that often. That's a main part of my system and it's part of my ground rules.

I figure out the basic premium by adding together the strike price of the option I am purchasing plus the amount I am going to pay to purchase each contract. From that total, I subtract the price the stock closed at the previous day. When that calculation is done, I should have a premium of less than $1.

Another major part of my system calls for only purchasing the contracts at a price I find attractive. This is really important and the subject of several emails I have gotten recently. So let me explain how I arrive at my purchase price.

These two elements will, at times, cause me to shoot for a purchase price well below the price where the option last traded. Now, you shouldn't let that last trade value dictate the purchase-order price. I don't. It can serve as a guide, but there are many factors that can cause that to be a misleading number as well. If the option is infrequently traded, that price may not reflect the true value.

Also, if the stock is performing poorly or if I suspect the stock or the market will go down significantly, I set my purchase order below the last trade and let the market come to me. If my order is filled at that lower price, I have gotten the bargain I was seeking.

If it doesn't come all the way down, I have lost nothing and will use that money somewhere else --- on a pick that does come all the way down to me. I will live to fight another day.

I sometimes shoot very low, and the market takes a day or two to come down to me. Sometimes it never does. Now this is a very important factor because, as subscribers to my newsletter, Nails on the Numbers, will note, the price you pay will often determine the success of a pick.

If I get my lower price, the chances of me winning sooner goes way up. Essentially, the lower purchase price I achieve, the better bargain I have found. The lower the price where the options gets filled, the less ground the option needs to climb in order for me to grab my win. And remember, I set my good till canceled (GTC) sell order $1 above my average purchase price. So, the lower the purchase price, the lower the sell price, the easier it is to achieve a win.

I picked Cameco ( CCJ) at a much lower price, and it turned in a win. Other wins I have grabbed recently include Caterpillar ( CAT), General Electric ( GE), Garmin ( GRMN), Yahoo! ( YHOO), McDermott ( MDR), Halliburton ( HAL), Parker Hannifin ( PH) and Frontier Oil ( FTO).

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."