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« Endeavour Silver: Silver Production Up 41% Gold Up 61% | Main | Perfect-Worlders, Get Real! »
Sunday
Jul042010

Silver Wheaton Corporation Call Options Update 05 July 2010

Silver Chart 05 July 2010.jpg

We kick off with a quick look at the metal itself where we can see that Silver prices came close to taking tea with the 200dma on Friday following a couple of down days. Hopefully the sell off is now over. The technical indicators have almost unwound suggesting the slide in prices is now over. Watch for the black line on the STO turning up, as a short term indicator this will give us a clue that silver has stopped sliding and is about to head higher.

Gold prices were hammered on Thursday, however, they did bounce back on Friday by about $12.70. We have seen this pattern over and over again, a sharp down turn in prices followed by a steady climb as it has been all the way from the $400/oz.

So, with the expectation that silver prices are about to move higher we took a look at silver Wheaton which had been sold off fairly aggressively and decided to increase our exposure to this stock by acquiring more Call Options. As you know on the 29th May 2010 we purchased some Silver Wheaton Corporation (SLW) Call Options which are the September 2010 series, with a strike price of $21.00 and we paid $1.30 per contract for them. On Friday we decided to advantage of this dip so we doubled our position for a cost of $0.95, reducing our average price to $1.12. As they say, fortune favours the brave, so its fingers crossed for us, while you guys can have a chuckle watching us wrestle with the myriad of events that will shape our thinking.

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 $18.65.

The Company has a market capitalization of $6.39 billion, with 342.75 million shares outstanding, a 52 week trading range of $7.12 to $21.89 with an average volume of 5-6 million shares traded, although spikes in trading have seen 14 million shares change hands.


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.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

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Reader Comments (40)

Good pick-up! Been patiently waiting on SLW for another go...and will be in the CALLS - (mimimum September) within 2 weeks - for a GOLD seasonality play.

July 5, 2010 | Unregistered CommenterMark

You may see a slight move up in sliver, but nothing big. I will be buying put options. Silver may slide to under $13.00 an OZ. All major indicees will get hit.

July 5, 2010 | Unregistered CommenterJerrold Minyard

Two diverse opinions, good stuff, the more the merrier!

July 5, 2010 | Unregistered CommenterSilver Prices

At a cost average of $1.12 I was wondering where you guy's have placed your stop loss on your trade should SLW continue to sell of and you are forced to exit?

July 6, 2010 | Unregistered Commentertom

Thats why you have to go short. SLW has to be down today. Gold has lost over $14.00 today 7/6/2010. Silver will follow. Has I wrote before all major indices will fall.(DOW,S&P,NASDAQ) This is not the time to be buying CALL$.

July 6, 2010 | Unregistered CommenterJerrold Minyard

Tom,

We have not placed a stop loss on this trade, it doesn't have the same liquidity as say SLV, so a flat patch would see us stopped out, its a very risky play.

July 6, 2010 | Unregistered CommenterSilver Prices

For the last 5 five days SLW is down. Watch the middle bollinger band, once it crosses down into the fifty day moving average lookout. That very bearish. Its starting to set up. On the 28 of July SLW gapped down. Its going down. Look at Hecla minning (HL) a pure silver play. Its a bellweather. It down.

July 6, 2010 | Unregistered CommenterJerrold Minyard

Jerrold,

Thanks for the comment and we take your point about the Bollinger bands, we may have to pull the pin on this one if it does not turn very soon.

The STO looks to be at the bottom and it to could give us a signal that SLW has turned.

July 7, 2010 | Unregistered CommenterSilver Prices

Hey, Check out the fundamentals on ETF FAZ. This may be a killer. I bought down on FAZ, starting at$39.40 to about $10.00 and some change. I'll ride this trend.

July 7, 2010 | Unregistered CommenterJerrold Minyard

If you haven't placed a stop loss when do you intend to get out and protect your capital? Or are you prepared to lose all your money on this trade? Is that not more like gambling? SLW closed at 18.07 and gold/silver are looking to trade down today so they're related stocks should follow. The Sep 21 calls are trading in the .60's your almost 50% down. Do you intend to hold till Sep and be damed or wait till your down 90% and sell? Are you waiting on the technical's you guy's follow to give you a signal to go or stay? Thanks, Tom.

July 7, 2010 | Unregistered Commentertom

Have looked at SLW chart in more detail and looks like MACD has a negative divergence to price action which usually means lower prices and a triple top in place. So it doesn't look good from a purely technical position.
Will watch for a better entry position.

July 7, 2010 | Unregistered CommenterMark

Yes, mark. The MACD line(black line) has move far away from the signal line(red line). Check the histogram bars in the in the macd. The question is: Will we have a rally in the metals this summer?????

July 7, 2010 | Unregistered CommenterJerrold Minyard

There is a right shoulder forming on the DOW JONES ind. Bearish.

July 7, 2010 | Unregistered CommenterJerrold Minyard

That's the million dollar question jerrold...will we have a golden/silver summer? looking at macro economic issues, we are not out of the woods yet with all the debt/deficit issues - which I take as a bullish point for gold/silver...however, technically the charts are not looking the best. Time will tell.

July 7, 2010 | Unregistered CommenterMark

Team,

A better day today as SLW put on 4.33% or 79 cents on the back of a silver prices closing at $18.03, so still sweating.

July 7, 2010 | Unregistered CommenterSilver Prices

I see that SLW hit the bottom of the bollinger band. HL(hecla) did the samething. FAZ went down just as these silver plays went up today. The fundamentals on silver are still bearish, and I feel the same about the financials. So, Mark. I'll stay bearish, and raise you 3x. Once the right shoulder is complete on Dow Jones Industrial average, look out below. Words from Gerald Celente:"2010 crash". Every major indice, commodities, tech, etc, will move down. This will move the herd into the bond market, and the dollar will move up.

July 7, 2010 | Unregistered CommenterJerrold Minyard

The USD is falling out of bed, next stop will be the '80' level, onwards and downwards for the USD, it is dead in the water.

July 8, 2010 | Unregistered CommenterSilver Prices

It may go to 80.00 on the index(dollar index), but you will see parity with the EURO. 80.00 on the dollar index maybe support, before the crash. The market will crash. You may see the dollar index top out around, or above 90.00 on the dollar index. Parity on the dollar index and the EURO is 110.00. The reason for the rise in the dollar will be the crash in the stockmarket. The herd will run to bonds. This will push the dollar up. Then, you will see the dollar devalued and a banking holiday.

July 8, 2010 | Unregistered CommenterJerrold Minyard

What do you think??????? Right now bond sales are low or have a history of being low.

July 8, 2010 | Unregistered CommenterJerrold Minyard

I think the dollar will be fine for at least ten years but will go up and down. Gold and silver are doing their seasonal sell off. The stock market may fall further but they won't let it fall to far before pumping more free money into the system.

July 8, 2010 | Unregistered Commentertom

Tom start doing your research.

July 8, 2010 | Unregistered CommenterJerrold Minyard

Nothing pwersonal

July 8, 2010 | Unregistered CommenterJerrold Minyard

jerrold agree US$ parity with EURO and also if the market tanks it will be a re-run of what happened in 09 with a run to the US$...it wouldn't surprise me. I'm just looking to scratch out a living doing short term trades and options is one way to do that...am also aware of the triple leverage etfs such as FAZ. It's always good to be aware of what's coming at all of us. Thanks for your opinion it may well prove to be true.

July 8, 2010 | Unregistered CommenterMark

In the meantime I'll continue to place trades with a pre-set risk management level that I'm comfortable with - in the event of a sudden doomsday scenario playing out.
Cheers

July 8, 2010 | Unregistered CommenterMark

What research do you suggest I need to do?

July 8, 2010 | Unregistered Commentertom

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