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« Stuck for a Christmas present for someone dear to you? | Main | Silver Prices about to ‘Pop’ »

Silver Wheaton Corporation Call Options Up 48.61% since November 8th, 2010

SLW Chart 23 Nov 2010.JPG

A quick update for those who have followed us into this trade by acquiring the same Silver Wheaton Corporation (SLW) Call Options which are the March 2011 contracts at a strike price of $35.00 for which we paid an average price $3.31 per contract. These contracts were ‘out of the money’ at the time of purchase, November 8th, 2010, the price paid was all time premium.

Fast forward to todays action on the NYSE and we have SLW closing at $36.14, which places these contracts 'in the money' as the time premium is $3.82 now and the intrinsic value is $1.13, as they closed at $4.94, registering a gain of 48.61% in fifteen days.

So, if silver prices, where we understand that the physical supply is extremely tight, can continue to head north, then we could shortly see SLW make a new high. A new high would mean that once again SLW will be in uncharted waters and should it catch a tail wind it could head north in leaps and bounds, dragging our Call Options along for the ride.

On the downside we are on the eve of the COMEX contract expiry so tomorrow could bring some downward pressure on silver prices. It is also a short working week in the United States as Thanks Giving is on Thursday, November 25, 2010, so Friday will also be effected, in terms of lower volumes.

This brings us to the above chart, where we are ever so pleased to report that SLW has put in another marvelous day with a gain of $1.44 as silver prices gain $0.47. A word of warning though, we don't like the size of the gap thats opened up between the stock price and the 200dma. However, the technical indicators may have to take a back seat if silver pushes higher.

Now, on October 1st, 2010, we posted an article from which we have taken a snippet, entitled:

Silver Wheaton Corporation: A Takeover Target?

As an example we have just witnessed, Kinross Gold Corporation’s (KGC) all paper merger of around $7.00 billion dollars for the acquisition Red Back Mining. There are a few other notably large takeovers of late which demonstrates the willingness of companies to come up with the big bucks in order to lock in supplies for the future. So, as these predators scan the horizon for suitable targets Silver Wheaton could well fit the bill. With a current market capitalization of $9.17 billion it will require a company of some substance, however, it would be securing a supply of silver which is ramping up.

Here we are on the 23 November 2010 and the market capitalisation of SLW is a staggering $12.52 billion, you have to admit that it would have been one heck of a profitable takeover. If Silver Wheaton continues on a rapid growth path then it will no longer be the prey, however, it may well become the predator. We can only conclude that the more opportunistic mining enterprises have missed the boat on this one.

Scanning the air waves we have the following revised price targets for SLW:

Silver Wheaton Target Raised To $42 From $40 By Scotia
Silver Wheaton Target Raised To $36 From $28.50 By GMP
Silver Wheaton Target Raised To $35 From $29.50 By UBS

Silver Prices Target Unchanged at $100.00

So there you have it.

Silver Wheaton Corporation trades on the New York Stock Exchange and the Toronto Stock Exchange under the symbol of SLW.

The Company has a market capitalization of $12.52 billion, with 346.56 million shares outstanding, a 52 week trading range of $13.04 to $37.20 with an average volume of 10-11 million shares traded, although spikes in trading have seen 14 million shares change hands.

Over in the options trading pit the team have updated the progress chart to include closed trades, now 51 winners and out of 53 trades.

sk chart 19 Nov 2010.JPG

The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today?

Stay on your toes and have a good one.

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