Silver Wheaton Corporation Options Update 10 August 2009
Sunday, August 9, 2009 at 07:00PM
Silver Prices in Silver Mining Companies
SLW Chart 10 aug 09.JPG

Chart courtesy of Stockcharts

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) for an average price of $0.375 per contract and they closed on Friday at $0.55 when the stock price dropped 1.11% to close at $9.77. We had hoped for a slightly greater fall as both SSRI and PAAS fell 3.79% and 3.50% respectively.

These options expire on the 22nd August 2009 so we have two weeks before expiry during which time we hope to exit with a small profit.

As we can see from the above chart the key to our short term trade on SLW is the USD. Gold was doing well, silver doing even better and SLW was outplaying both and in our humble opinion became overbought. The USD is under enormous pressure but does manage to fight back from time to time, so a bit of a rally over the next few days would take the shine off the PMs thus reducing SLWs stock price and giving us a reasonable exit.

In terms of an exit strategy we added the following to the comments section in response to a readers request:

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.

Please remember that trying to anticipate the direction of the main players in this trade over such a short time frame is extremely difficult and therefore extremely risky. Its a move for active traders only and not a cure for insomnia.

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 $9.77. The Company has a market capitalization of $3.05 billion, with 311.80 million shares outstanding.

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