In order to be successful, you must first know the ground rules of the playing field you're on. With my deep-in-the-money (DITM) calls strategy, you must fully understand how to average down or to properly use the next buy levels.
Many readers have written in asking me to explain this essential part of my strategy. Averaging down has helped me grab a number of gains and put other picks in better position to grab potential gains in the future. I have averaged down with
Morgan Stanley(MS Quote - Cramer on MS - Stock Picks),
Citigroup(C Quote - Cramer on C - Stock Picks),
United Health(UNH Quote - Cramer on UNH - Stock Picks),
Boeing(BA Quote - Cramer on BA - Stock Picks),
Texas Instruments(TXN Quote - Cramer on TXN - Stock Picks),
Cisco(CSCO Quote - Cramer on CSCO - Stock Picks),
International Paper(IP Quote - Cramer on IP - Stock Picks),
3M(MMM Quote - Cramer on MMM - Stock Picks),
AIG(AIG Quote - Cramer on AIG - Stock Picks),
Coca-Cola(KO Quote - Cramer on KO - Stock Picks),
Tesoro(TSO Quote - Cramer on TSO - Stock Picks),
Parker Hannifin (PH Quote - Cramer on PH - Stock Picks),
Garmin(GRMN Quote - Cramer on GRMN - Stock Picks) and
Archer Daniels Midland(ADM Quote - Cramer on ADM - Stock Picks), just to name a few.
Without averaging down, you will have a hard time achieving many of the gains that I am able to grab. So, listen up: Here are the basics.
I make DITM picks in my subscription newsletter, "Nails on the Numbers," three times a week (You can take a free trial to the newsletter by
clicking here). In the columns, I let readers know what price they should pay for the options. I pick companies that are good and solid but are down on their luck, so to speak. They do not have accounting scandals, but instead are usually being beaten up by the Street because of a bad quarter or are being pulled down along with the rest of the market.
When I make my pick, I expect my order to get filled at that price. If it does, I anticipate that the price will go up $1.00 above my purchase price, and I will achieve a $1,000 gain. However, the reality is that not every pick goes straight up, and in order to stay ahead, you need to follow my strategy for averaging down.
Lenny Dykstra
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