You need to describe your problem a little better.

The flag "-dumpstream" is used to, as it suggests, dump the stream. You use it to save the raw stream. The flag "-dumpfile" tells mplayer where to save the data.

If you expect to be able to watch the stream at the same time as you dump it, you are expecting the wrong thing.

What you call the dump file is not very important but placing it somewhere where there is enough space is. Most people would use /home/user/MyDocs or, for example, a mounted microSD card.