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« Silver Wheaton Corporation Call Options Up 40.35% Today | Main | The 10 Biggest Mistakes Investors Must Avoid in the Coming Decade »
Thursday
Aug262010

Silver Wheaton Corporation Call Options Bounce 80.95% in One Day

slw logo.JPG


The white knuckle ride continues with our venture into the 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, 2nd July 2010 we decided to take advantage of a dip and so we doubled our position for a cost of $0.95, reducing our average price to $1.12.

Since they have been hammered and at times we were tempted to buy again thus lowering our average price, however, we remained in a fairly cautious mood and decided to stick out. Yesterday we saw silver prices head north putting in good gains and the stock price of SLW put on 4.68%, which in turn boosted our options by 80.95% to close at $1.14, just two cents above the price we have paid for them.

The good news is that SLW is trading above the strike price of $21.00 so any move higher from here will have a direct positive effect on the value of the options. The bad news is that today, when trading begins in New York City, it is COMEX options expiry day for this month. The powerz that be could well thump both gold and silver prices sending our current position down the tubes again. However, silver has shown some strength especially over the last two days, so when tomorrow comes we are in the lap of the gods.


Please note that the stock price is now close to its 52 week high of $21.89, a break above this figure puts SLW in unchartered waters with no overhead resistance so it could move a lot higher in a short time frame.

Also against a move higher are the technical indicators which are in the overbought zone, suggesting a pull back. However, a closer look shows us that the RSI stands at 65.75, so there is a little room to move before we hit the ‘70′ level, which generally tells us to expect some consolidation. The STO is right up there, but, the MACD is not too bad and could go a little higher.

In conclusion we are still on a tight rope right now and the stock price could go either way so we are left sweating and holding onto our hats on this one.

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 $21.35.

The Company has a market capitalization of $7.39 billion, with 344.00 million shares outstanding, a 52 week trading range of $9.51 to $21.89 with an average volume of 4-5 million shares traded, although spikes in trading have seen 14 million shares change hands.


Stay on your toes volatility will be the order of the day and 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.


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)

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Reader Comments (3)

Well done. The wild ride breakout is coming some time soon... and it could easily be now.

August 26, 2010 | Unregistered Commenterfallingman

fallingman,

Yes indeed, SLW is sitting at $22.11, up 2.89%, as we write, which is a new all time high for the stock, so we are now in unchartered waters. The bid is about $1.50 at the moment with 20 minutes to go before trading closes. Silver is steady at $18.96/oz, so rightly or wrongly we are holding.

August 26, 2010 | Unregistered CommenterSilver Prices

fallingman,

We are out for a good profit - will write it up shortly, cheers, Bob

August 27, 2010 | Unregistered CommenterSilver Prices

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