Buying DRL on dips

Discussion in 'Stocks' started by Option Trader, Feb 7, 2008.

  1. See the chart of DRL regarding recovery after dips in the past.
    See how the shorts sold a ton of shares at $19.50, and how even if the stock would recover a $1 or so they would still be profit.
    See the change in the company in the wake of the private equity group.
    See the new loans % increase.
    See the expectations to turn profitable.
    Note the interest rate reductions which I believe benefits them greatly.
    Note how $1 is being paid for the calls that the price will go above $50 by Jan 2009. ($1 is because you can sell 20 options at $.05 for each 100 shares, given the 20:1 reverse split).
  2. I believe at the time of my message, DRL was at $17.50ish, and it closed at $18.29.
  3. Up another $1.02 on Friday, at $19.31. Eighty nine views, and I hope this helped someone.
  4. Now, a month later, DRL is down to $18.04, which I believe will almost inevitably recover within days. See again DRL's track record of recovering on the dips & the speed in which it happens (including the pre-mentioned February recovery).

    To add icing to the cake:
    A) Since my February postings, other good news has come out on DRL that caused the stock to reach (hit $22.03 on February 27th--actually the public got the news only the next day.)
    B) We are just days away from the anticipated 10q (expected on Friday), which I believe may already show favorable results & likely to have no more of these one-timer write-offs.
    C) We are less than 2 weeks away from the next anticipated interest rate cut, which to my understanding has a major positive impact on DRL's mortgage portfolio.
  5. Yesterday there were some liquidations. Today, the price is $18.75. Moral of the story: buy DRL on dips.
  6. Today, DRL closed at $19.62, about a 9% gain in 4 days from the $18.02 price (had I called the bottom, it would have added another 4% or so).
  7. March 18, DRL closed at $21.18.

    Today, DRL closed at $19.13, which I believe is a great buying opportunity again--assuming they already got enough people to liquidate today.