Lenny Dykstra on wanting "to win again"

Too bad the Baseball Hall of Fame doesn't reward chutzpah because former star outfielder Lenny Dykstra would surely be enshrined. The one-time New York Met and Philadelphia Philly-turned-financial-whiz-turned-convicted-felon is that self-confident.

Indeed, chutzpah, the Yiddish word that roughly translates to bold audacity, fits the 51-year-old perfectly. What else can describe Dykstra's desire to get back into the financial punditry business that gained him both notoriety -- and infamy -- a few years ago?

Indeed, Dykstra and his partner/editor Dorothy Van Kalsbeek are in the midst of relaunching his subscription-only website that began at the height of his fame in 2008, fueled by CNBC host Jim Cramer's declaration that he was "one of the greats in this business" of stock trading. For a while, Dykstra lived in a swanky California mansion once owned by hockey great Wayne Gretzky. However, Dykstra's life spiraled out of control, and he lost everything.

"Then this big organization called the federal government got mad at me," Dykstra said in a profanity-laded interview with MoneyWatch that was punctuated by pithy remarks like that one. "They took it all. They took $50 million."

Dykstra is referring to his conviction for bankruptcy fraud after he was caught illegally hiding memorabilia from his playing days without first getting permission from the bankruptcy trustee. In another case, Dykstra was caught stealing someone's identity to steal or lease several new cars. He was released from prison in 2013.

Since then, Dykstra said he has been trying to get his life back on track and has been replenishing his bank account from sports-card-show appearance fees. Dykstra spent time with his younger son, Luke, during his senior year in high school. He also performed 500 hours of community service at a homeless shelter and says he has kicked his substance-abuse problems.

That court-ordered good-deed doing is now over, and Dykstra is ready to get back to what he knows best, being Lenny Dykstra.

"Thank God I have been doing card shows," Dykstra said, adding that he pays 10 percent of his income to a court-ordered restitution fund for his victims. "Now I am refocusing on doing want a man does. I don't sit around and give up on life ... I know how to win, and now it's time to win again."

Dykstra's reputation as a financial whiz came through his association with The Street.com, where he wrote a column. In his MoneyWatch interview, Dykstra said he was fired from the New York-based company, which was co-founded by Jim Cramer, for "making too much money."

Media reports, however, claimed his column was dropped when news of his financial woes appeared in the press. He repeatedly praised Cramer for being the only person who was "right" about him, though he hasn't been in touch for a while. A spokesman for The Street declined to comment for this story. (Note: I worked briefly for The Street.com while Dykstra was associated with the site, but our paths never crossed.)

The message Dykstra is selling now hasn't changed since he first gained notoriety: The pathway to stock market success can be found through "deep in the money (DITM) calls." A call is a bet on the direction of a stock price. DITM calls are priced below the value of the underlying security. For instance, a $5 option on a $10 stock would be deep in the money. Essentially, DITM calls allow investors to purchase large amounts of stock using less capital than they'd need to buy the stock outright.

Under the system that Dykstra advocates, investors place a sell after buying an option as soon as its price increases by $1. The approach, Dykstra says, limits risk. However, his detractors note it crimps rewards, too, because the option could go even higher, a notion that the former ballplayer rejects.

"You can't expect a blowout every time," he said. "The reason why the system works is discipline."

Ironically, as Dykstra noted, "discipline" is a quality that has been lacking in his personal life, though he insist he always takes money seriously.

While at The Street.com, Dykstra attracted the attention of the Securities & Exchange Commission after claiming that his "batting average" for picking stocks was 110 wins and no losses. The agency launched an investigation but informed Dykstra in 2010 that no action was being taken against him.

Dykstra is so proud of that decision that he included a copy of the SEC letter in his marketing material. He now claims a record of 440 wins and 1 loss.

The problem with the DITM strategy, which others advocate as well, is that it's risky. Like stocks, option prices can be volatile, and options can be difficult to trade because they can be less liquid. MoneyWatch contributor Larry Swedroe likens DITM calls to trying to win the lottery.

"You have to find the dummy on the other side of the trade," said Swedroe, principal and co-founder of BAM Advisor Services. "It's risky because you're likely to lose money or get lousy returns."

A handful of subscribers -- Dykstra won't say how many -- have stood by him throughout his travails. In the marketing material, Dykstra says investors who followed his strategy would have earned about $1.1 million had they followed all of his trades from 2008 through today.

Of course, the road ahead for Dykstra isn't easy. For one thing, thousands of investing newsletters, which don't have his baggage, are out there vying for the hearts and minds of the investing public. Dykstra, though, remains convinced his time has come.

He said his background as a convicted felon is reason enough to trust him because if he were caught pulling a scam, he would be sent back to prison.

Said Dykstra: "I have the federal government watching me every day."