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« Silver Wheaton Corporation Options Trade Up 25% | Main | Silver Wheaton Corporation A Good Second Quarter »
Wednesday
Aug052009

Silver Wheaton Corporation: A Short Term Trade

SLW Chart 06 aug 09.JPG

Chart courtesy of Stockcharts


Taking a quick look at the above chart we can see that Silver Wheaton Corporation (SLW) could well take a breather after such a good rally. The Technical Indicators also suggest SLW is now overbought. So we decided that a little pull back was possible and went out and bought the August 2009 $10.00 PUT Contracts. These options expire on the 22nd August 2009 so this is a hit and run style of trade which will only appeal to those who have a sort of day trader mentality. We placed orders at $0.35 and $0.40, the trading range for the day oscillated between $0.35 and $0.50 throughout the trading session with both of our orders being filled for an average price of $0.375.

This is a very risky trade so don't put the ranch on it as we still expect silver to be trading on the right side of $20/oz by the end of the year. View this as a slight aberration that we are trying to use to our advantage. Silver Wheaton still forms part of our core holdings in anticipation of a fall explosion in silver prices.

Have a good one while we sweat it out.


Silver Wheaton Corporation trades on the New York Stock Exchange and the Toronto Stock Exchange under the symbol of SLW and is currently trading at $10.23. The Company has a market capitalization of $3.19 billion, with 311.80 million shares outstanding.

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Reader Comments (8)

Do you have an exit target? Did you put a sell in to capture that target if it should hit?

August 6, 2009 | Unregistered CommenterBC

Good questions in #1 comment. I would like to know what limit price to buy at, as the two comments hinge on one another for profit, if any? Thanks.

John

August 6, 2009 | Unregistered CommenterJohn Ell

As for me the buy was at the open for 0.35, that is now past and I was willing for this to be one that got away. I am considering a GTC sell for 0.75. Not sure that I see this as a dranmatic drop, but I am still considering.

Let's see if silver-prices.net posts their exit plan...

August 6, 2009 | Unregistered CommenterBC

Do we really need this kind of a squeeze play? The last price today was at $.50 with a pretty good show of vol. Considering the time decay on the short expiry the drop will have to be fairly quick and steady.

I may get drawn in, will have to see by tomorrow. Only two weeks to go.

John

August 6, 2009 | Unregistered CommenterJohn Ell

EXIT PLAN

We normally hope to make a 100% profit on this sort of trade however we have placed a sell order at $1.00. Sorry its a full moon and all that.

Being on the bottom end of the world we are asleep when NYSE opens and we clock in just before the close, which is about 7.00am here.

Your comments are bang on in that the time element will erode the value quickly so we may need to move fast.

Dont wait for us, set your own target and try and stick with it. If it goes sour then pull the pin and limit your loses.

Dont go too mad on any of these ideas, make sure that you still have some cash to fight another day.

Sorry about the late reply Ive been volunteered to do a charity run and I started training today which was a lot harder than I imagined.

Good luck.

August 7, 2009 | Unregistered CommenterSilver Prices

Keep an eye on the dollar, a slight rise would help our PUTS as it would put a cap on gold.

http://quotes.ino.com/chart/?s=NYBOT_DX&v=i

August 7, 2009 | Unregistered CommenterSilver Prices

I decided to exit at $0.40 for 15%. In order to meet my $0.75 sell, SLW would have to drop to below $9.50 and that is looking less and less likely.

August 7, 2009 | Unregistered CommenterBC

BC,

You walked away with a profit and thats all that matters, we are still sweating and have everything crossed.

August 8, 2009 | Unregistered CommenterSilver Prices

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