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DFC is setting-up for a break-out - Learn to Trade Options | #1 Options Trading Education

DFC is setting-up for a break-out

Published on October 5, 2007

DFC is setting-up for a break-out

October 5, 2007

(for details pls visit www.OptionPundit.net)

dfc-triangular-bullish-pattern-oct-5.png There is always a danger in charting, like, I mentioned CAM earlier about breaking-out, well since then it’s been pounded and hasn’t gone past successfully. Therefore I generally take “technical analysis” with grains of salt. Since DFC is already part of my value investing portfolio, thought to share a technical set-up on this, a triangular bullish pattern. If it break-out about 5.5-6 on solid volume, I think it has a pretty good chance to deliver 15-20% returns. But as always, I plan to hedge as well, in case it doesn’t break-out.

Trade carefully, but trade profitably, OP


  • Dayton says:

    Value investing in a rampant bull market is a baby thrown out the window. with bath water.

    There is so much momentum in 100s of stock that you need not sit there and nurse sick babies for couple of years and come out making 20-30% and look like a hero. I mean there is so much exploding around you in the OIL and TECH sectors and indexes that you can make la lot more in a short term. I have been riding OIH, GOOG, RIMM, AAPLE, DO, DE, PCU, FCX and others and raking in gains while this rally continues from the bottom of the pit since August 16 the 2007.

  • OptionPundit says:

    Firstly, congratulations on superb results! Keep it up and keep sharing. I hope you are playing options on those so that results are even way superior to stocks alone. Interesting analogy you have shared 🙂

    2ndly, Neither I mentioned DFC here for value investing nor 15-20% in a year. I am talking short-term and as a break out play. It may or may not happen (I am not good in picking directions). 15-20% on break-out, simply can result into 100% gains via Options trading. I don’t think that’s small by any means, at least for my kind of trading where I am looking for only 6.9% returns per month CONSISTENTLY to double my capital every year.

    3rdly, DFC doesn’t qualify for value investing as per Phil Brown’s formula/calculation. I have it for some other reasons and it has a role to play in my portfolio. I have allocation principles that I live by and I keep changing as per Mr market mood.

    4thly, there are readers who have small capital base. Based on 3-5% rules/trade, they may not have sufficient funds to play in the names like OIH, GOOG, DO etc.

    All the best and keep making money, in the end that’s what counts.

    Thanks for sharing,
    Profitable trading, OP

  • Dayton says:

    Yes trading options. I find value investing interesting but do not seem to have the patience and time to see my money grow 10-20% a year. I think that school of though is OK, you need to value companies, but do not want to get stuck with the likes of —HNR, RAIL, DFC, WAG, WFMI, SBUX, NTRI, WMT, AXP. These stocks seem to go nowhere. Just look at the charts what have they done for you lately?

    During the last one year I have generated 0.90 cents of every dollar invested. That means if I started with $1 now I have $1.90 in my account That by far is a much better return than than 10- 20 % that value investing can hope to give me. Its good to know how these people do it. My returns include losses sustained in the July -August market correction. After the correction profits have zoomed up so far.

  • OptionPundit says:

    90% returns in a year is superior to any standard (excluding capital base criteria)…keep growing.

    Let’s discuss capital base-
    Before reading, pls don’t think I am discounting your results. Those are great. [Your may find this surprising though an Option trader championing “value investing” :)]. This is only to justify why value investing/patience still has a role to play.

    Turning huge gains on small capital is easy. I myself have tasted >1000s% in one day alone, many many times. But will I do that for a “huge” capital base? Never (that’s me). I still have part of my capital in “Fixed deposits (only 4-9% p.a)” and “Gold”.

    Large capital base, hardly anyone so far has been able to beat Mr Buffet in his records. Eddie, Mohnish may be following footsteps. But still they need “time” to prove it. Mr Buffet’s results are 21.4% compounded for last 4 decades and that too on a capital base that is par excellence. And that’s where the “value” from value investing comes in handy.

    You may wanna check if you will be playing same strategies (generating 90%/p.a.) if you had “huge” capital base to the tunes of these “Value investor” who are playing, say HNR (Mohnish) and BNI (Mr Buffet). If your answer is “yes”, hats-off to you. I would also like pick-up few skills from your brain. If the answer is “No”, then think again, if you want to learn “New tools” for varying amount of capital.

    Options and futures are good, IMHO, but good for “Acceleration” of portfolio vehicle. However, the vehicle body still needs to be made of something that is “Valuable”. The “Value” may come from “past stalwarts” (likes of KO, WPO, PG, AXP)” or “growing” (BNI, PTR, RIMM, GOOG, etc.).

    Profitable trading, OP

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