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« The Purchase of Silver: A Readers View | Main | Endeavour Silver Corporation Update 15 August 2009 »
Monday
Aug172009

Silver Wheaton Corporation Options Trade Closed with a 60% Profit

SLW Logo 03 jun 09.JPG

Just a quick update on our options trade on Silver Wheaton Corporation (SLW) which trades on the Toronto and New York Stock Exchanges.

We purchased the August 2009 $10.00 PUT Contracts (SLWTB) on 5th August 2009 for an average price of $0.375 per contract and we sold them today for $0.60 for a profit of 60%.

These PUT options have traded as high as $0.75 for a gain of 93% but we hung on in there in hope of achieving a 100% return, however silver then jumped up and our PUTS fell into negative territory. We revised our strategy and lowered the sell price to $0.50 crossing our fingers at the same time as we entered the last week of trading for this series. Fortunately the dollar rose, gold and silver fell and SLW dropped 6.49% today. Most of the damage was done in the Asian markets over night so when the market opened in New York the PUTS had already gained in value and we were able to sell at $0.60 per contract.

As you can see this was a rough ride and not one for the faint hearted and we are both pleased and relieved to get out with a 60% profit, made in a little over two weeks.

If you have a comment, whether you agree with us or not, then please feel free to add it to the article via the comments box.

Have a sparkling weekend.

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Footnote:

Over in the gold sector we are pleased to report that the PUT Options we purchased on U.S. Bancorp (USB) one week ago for $1.00 per contract, were sold today for $1.75 for a gain of 75%. We bought the September 2009 series with a strike price of $22.50 for $1.00 per contract (UEEUX).

We also bought PUT Options on IAMGOLD which have got off to a nice start.


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Reader Comments (8)

Nice job, I'd been watching this trade. I have several SLWIB calls hoping they go up. Have you a suggestion when to get out ? Any thoughts on goro ? TIA

August 18, 2009 | Unregistered CommenterRich

Rich,

This is just our opinion as we are not financial advisers so please take it with a pinch of salt.

A number of our readers are sitting with call options on SLW at the moment and it may prove to be a profitable trade for them.

You are holding SLWIB, these are the September $10.00 series trading at around $0.50 per contract and they expire on the 19th September 2009.

Looking at the chart of SLW we could argue that it is in a long term up trend and will finish the year being at lot higher than it is now, however your Calls have not got the luxury of waiting until the end of the year.

Short term SLW has tried twice to penetrate the recent high of $11.00 and failed which suggests that it hasn't got the legs at the moment for a substantial move higher.

We wouldn't buy them at the moment but as always don't be put off by us, its your money and your call.

Please let know what your exit strategy is and how you get on with it.

August 19, 2009 | Unregistered CommenterSilver Prices

Rich,

I forgot to mention that we are holding two sets of PUTS on IAMGOLD at the moment.

August 19, 2009 | Unregistered CommenterSilver Prices

I'm still holding my slwib calls ave price in at .75. I should have sold earlier. Good bad or ugly I'll let you know when I exit.

August 27, 2009 | Unregistered CommenterRich

Thanks Rich - SLW is upto $10.04 at the mo...

August 27, 2009 | Unregistered CommenterSilver Prices

I don't want to stare at a computer screen all day. So I put in a sell order at .95 on 90% of my slwib calls. I will check price hourly or so and may change sell price. I feel slw is lagging price of silver and may move up around the close of market day. Hope so anyway. I feel may be a lot of people wanting to sell at $1.00 so I put in at .95 .

August 28, 2009 | Unregistered CommenterRich

Rich,

It hit $0.75 today so you might hit the button next week.

August 28, 2009 | Unregistered CommenterSilver Prices

I sold all of my slwib options today, at $1.65, I was able to close all margin and have some cash. It was just getting to close to expiration. I may look at some $12.50 calls futhur out. If my slwib calls got to $2.50 I was going to buy some puts for insurance and just hold them. I am well pleased with what happened. My wife will get a nice bonus from this also. This is the first investment/wager that I remember, which I lost sleep over.

September 4, 2009 | Unregistered CommenterRich

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