Domino's Pizza (DPZ) update

The flag pattern appeared to break down and the stock price undercut the stop loss order point that would normally be set by investors.  A lot of the people who got stopped out might now want to get back in now that the stock is rallying and is gaping up.  I have decided to stick with my positions even though they expire in December to see if I can hit my targeted returns.  Here is to the current optimism in the market (however temporary until the next set of bad news comes in from Europe) and the potential profits.

Domino's Pizza (DPZ) update

The stock still continues to base in the formation.  We no longer have the pennant formation.  I would say the flag formation is still intact.  But the move needs to happen soon.  I am targeting a move from 34 to 35 to start taking profits (or sooner if this pattern takes too long to materialize).  I am starting to see a lot of positive coverage in the press about DPZ (e.g. Cramer has now recommended it in Mad Money).  I am looking for that move where everyone piles in driving the stock up about 15-20% and take my profits as option expiration drawn near.

New Stock Setup - Domino's Pizza (DPZ)

Looks like Domino's is setting up a very nice Penant  (Flag) formation.  This formation can pay off handsomely if it works.  Take a look at the attached chart.

The stock has moved from around a low of 26 (Oct 4) to around 32.50 for the flag pole formation.  And then is around 31.5 at present while making the flag/pennant formation.  That is about a 17% move (all numbers are rough and conservative).  A flag or pennant formation will generally result in the same percentage move if it breaks to the upside as before.  So we can (very conservatively) look for about a $5 move from here in a short period of time.  I am playing this with Dec options.  Dec 32 calls are running around 1.05 bid and 1.25 ask (but you can probably get them around 1.15).  I would expect the option to get to $4 or higher if the stocks makes it move in short order making it a potential triple play.  I also own some Dec 30 calls at present.   Of course, if the market breaks down (and who knows which direction it will head into with the Greek disaster that is ongoing in the European front), all bets are off.  This is a high risk, high reward pattern that I have played successfully in the past for very large gains (and some severe losses as well).  So buyer beware. 

Disclaimer:  This should not be taken as a recommendation to buy.  You should do your own due diligence and research before opening any positions.  Stock and Option trading is inherently risky and can result in the loss of all of your capital.  You should always apply sound risk management techniques.