Thursday, April 29, 2010 at 06:04PM
We are pleased to report that in todays trading session we sold our tranche of the JUNE 2010 series, $15.00 Call Options, on Silver Wheaton Corporation (SLW) for an average of $4.16 having paid a price of $2.02 per contract on 11th February 2010.
Taking a quick look at the above chart we can see that SLW has put in a good run over the last week or so, pushing our Call Options up by more than 100%, on the back of silver prices which gained around $0.40 in todays trading session. Also note that the RSI has popped up above the '70' level to hit 76.73, which suggests that the stock is now overbought. We had considered the use of a trailing stop, but they are not guaranteed and a drop in prices in overseas markets could see the stock price open a lot lower than the stop price, which is then negated and we would get the market price. So rightly or wrongly we decided to take the cash and retire to the sidelines for now.
Options are not for the faint hearted so go very gently with them.
Just to re-cap we suggested acquiring this stock when we posted an article on the 11th February 2010, entitled: Silver Wheaton Corporation: Buy This Dip, when SLW stood at $14.38, today it stands at $19.32, up 34% in just over two months and hopefully there is more to come.
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 $19.32.
The Company has a market capitalization of $6.59 billion, with 342.54 million shares outstanding, a 52 week trading range of $7.12 to $19.33 with an average volume of 5-6 million shares traded.
As a suggestion for those who do want leverage to the precious metals bull, the gold and silver funds together with the careful application of options trades could be a possible solution for you. This way we are exposed to any movement in gold prices which in turn is magnified by the effect of the option. Do remember that loses are also magnified in the same way so its not a strategy for the faint hearted. On the other hand the quality stocks are not performing as anticipated and a non-producing junior stock is a shot in the dark, however, its your money and its your call.
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