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« Silver Wheaton Corporation Call Options Closed with a Profit of 79.46% | Main | Silver Wheaton Corporation Call Options Bounce 80.95% in One Day »
Thursday
Aug262010

Silver Wheaton Corporation Call Options Up 40.35% Today

SLW Chart 27 August 2010.JPG



The anticipated shark attack emanating from the COMEX Options Expiry Day failed to materialize in NYC today, leaving silver prices unscathed. However, investors continued to favour Silver Wheaton Corporation Corporation (SLW) as a way of participating in this silver bull market and the stock gained 2.65% to close at $22.06. This in turn gave our Call Options a boost with the last trade standing at $1.60 giving us a paper profit of 38.92%.

The day before 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 Call Options 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.


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.

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

The technical indicators are in the overbought zone, suggesting a pull back. Also note that this rally has left two gaps in its wake which is not a good sign as the stock may retrace its steps and go down in order to fill them.

The expiry date for this series of options is 18th September 2010 which is looming rather fast so tomorrow we will assess the situation again and may just decide to sell and go back to the sidelines. Its a case of a good run, an overbought chart, the gaps that have been created on one hand and the fact that we have a breakout into unchartered waters on the other hand.

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, which is not unusual for us.

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 $22.06.


The Company has a market capitalization of $7.59 billion, with 344.00 million shares outstanding, a 52 week trading range of $9.51 to $22.46 (intra day today) 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 (4)

I haven't traded options in a long time, and recall that one of the guiding principles some said to follow was to add the share price to the strike price. The number was the point at which the trade would be profitable considering time decay etc. In your trade for SLW it appears that you are optimistic that the price would exceed this years' high price. Your comments are appreciated.
John

August 27, 2010 | Unregistered CommenterJohn Ell

John,

We have just closed this position for a profit of around 80% so we will write it up shortly, just need a little sleep as we are camping down at the bottom of the world... and the time difference plays its part.

August 27, 2010 | Unregistered CommenterSilver Prices

I had the same options which I bought at $1.43 . I sold to soon , I sold at $1.54 .

I may buy a later month , after a dip .

August 27, 2010 | Unregistered Commenterrich

rich, you still made a profit though, so alls good.

August 27, 2010 | Unregistered CommenterSilver Prices

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