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« Silver and Gold Fall from Favor | Main | Silver Wheaton Corporation Call Options Up 40.35% Today »
Saturday
Aug282010

Silver Wheaton Corporation Call Options Closed with a Profit of 79.46%

SLW Chart 28 August 2010.JPG


We are pleased to report that today we closed our Call Options on Silver Wheaton Corporation (SLW) selling half of them for $2.00 at around 3.15pm EDT and the other half a little later for $2.02. We paid an average price of $1.12 so we managed to generate, or scramble, depending on your view point, a profit of 79.46% on this trade.

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.

Taking a quick look at the above chart we can see that the MACD, STO and the RSI are now in the overbought zone which influenced our decision to grab the cash and run. We are also a tad nervous about the gaps being created as SLW headed north, they tend to be back filled sooner or later. We also had to consider that our option expiry date was heading towards us rather quickly and the rapid rise of the stock where also influential in our decision to pull the pin.


SLW may well climb a little higher from this point, however, we think and they are only thoughts, that it will take a breather albeit for a short period only.

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, keep an eye on it.

In conclusion it was a bit of a tight rope at times and the stock price could have gone either way so we were left sweating at times, which is something that you need to get comfortable with if you are to keep a cool head when things are going against you.

Silver Wheaton is our largest stock holding so we are pleased to see it make a new all time high and give our portfolio a boost. It has also been kind to us on the options front as we closed a similar trade on the 29th April 2010 for a profit of 106% and that was followed by another trade which closed on the 1st May 2010 for a profit of 103%.

As in Jim Slaters book entitled The Zulu Principle, it pays to understand one stock well and trade accordingly. A portfolio with a hundred stocks is way too much data to keep a breast of, so try and focus on your favourites and make them work for you.

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 $22.80.

The Company has a market capitalization of $7.84 billion, with 344.00 million shares outstanding, a 52 week trading range of $9.51 to $22.84 (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.



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