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« The 2010 Silver Buying Guide | Main | Ten Benefits of Expatriation »
Wednesday
Jun162010

Silver Wheaton Corporation Options Trade Up 10.38%

SLW Chart 16 June 2010.jpg

We will kick off with a quick look at the chart which is shaping up reasonably well for a run at $22.00 and beyond. At the last update SLW had just nudged above the 10dma, it is now starting to pull away as it edges closer towards the $20.00 level. Also note a positive crossover on the MACD which is indicative of better things to come.

As you are aware on 29th May 2010, we purchased some Call Options which are the September 2010 series, with a strike price of $21.00 and we paid $1.30 per contract for them. The last trade finished at $1.45 per contract on the New York Stock Exchange today, for a paper profit of 10.38%. To generate a profit we need to see silver prices put in a decent performance which they did today with an increase in silver prices to $18.57. Gold prices continue to show strength gaining another $12.00 or so during the session.



Just to refresh our memories this is an overview Silver Wheaton's web site:

Forecast 2010 production, based upon the company's current agreements, is 22.2 million ounces of silver and 20,000 ounces of gold, for total production of 23.5 million silver equivalent ounces. By 2013, annual production is anticipated to increase significantly to approximately 38 million ounces of silver and 59,000 ounces of gold, for total production of over 40 million silver equivalent ounces. No ongoing capital expenditures are required to generate this growth and Silver Wheaton does not hedge its silver production.

SLW Production Profile 16 June 2010.jpg

Silver Wheaton’s industry-leading growth profile is driven by a portfolio of world-class assets, including silver streams on Goldcorp’s Peñasquito mine in Mexico and Barrick’s Pascua-Lama project straddling the border of Chile and Argentina. The company’s unique business model creates significant shareholder value by providing considerable leverage to increases in the silver price while reducing the downside risks faced by traditional mining companies. Silver Wheaton has an experienced management team with a strong track record of success and is well positioned for further growth.


Have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.

The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:

On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09.

On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days.



Accumulated Profits from Investing $1000 in each OPTIONTRADE signal 14 May 2010.jpg

Recently our premium options trading service OPTIONTRADER has been putting in a great performance, the last 16 trades with an average gain of 42.73% per trade, in an average of just under 38 days per trade. Click here to sign up or find out more.


Silver-prices.net have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.

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Reader Comments (4)

Good morning everyone,
I have been studying the Silver Wheaton website trying to understand how the company operates.
I hope you will all forgive me but I am not experienced in reading and analyzing financial data or understanding business models.
This company is seemingly too good to be true.
What I do not understand is why companies like Barrick and Goldcorp would enter into an agreement with SLW. Both of these companies can surely borrow the amounts of money that SLW pays them in advance for this agreement to sell SLW silver at prices around $3.90 per oz. I was told that there was a benefit to Barrick and Goldcorp to enter into these kinds of contracts with SLW because there is no dilution of stock values with this type of capital raising.
Am I missing something here or is this type of business model sound and I think more importantly is this a type of business plan that will be renewed and thus remain a viable business model into the future. As I understand it this is hedging on the part of Barrick and Goldcorp.
If anyone has any thoughts on the soundness of SLW as a company I would very much appreciate any thoughts you might have.
Thank you
Tom Connell

June 16, 2010 | Unregistered CommenterTom Connell

As we write gold is down $4.00/oz and silver is down $0.06, however, SLW managed to gain $0.38 or 1.90% to trade at $20.35, this resulted in the Call Options gaining $0.11 or 7.59% to trade at $1.56. So the overall paper profit currently stands at 18.75%.

Remember that the strike price is $21.00, so if SLW can get above $21.00 then the Call Options will appreciate dollar for dollar with the stock price giving us some nice leverage. Fingers crossed at this stage.

June 16, 2010 | Unregistered CommenterSilver Prices

Tom,

I hope that our readers come back with their views so that we can some balance into this debate. We see it as a sound investment and it is currently our biggest single holding, but, as you well know we see things through silver and gold tinted specs....

June 16, 2010 | Unregistered CommenterSilver Prices

Team,

A quick update: SLW gained $0.44 or 2.17%, the Calls gained $0.27 or 17.31% today. So we are now sitting on a paper profit of 37.79%. Not a bad start.

June 17, 2010 | Unregistered CommenterSilver Prices

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