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« Where will Silver go this week? | Main | Silver-prices step on the gas »
Thursday
Sep162010

Silver Wheaton Corporation Call Options Update 16 September 2010

SLW Chart 16 Sep 2010.JPG

Just a quick note to update you on our position regarding the purchase of Silver Wheaton Corporation (SLW) Call Options which we acquired on the 8th September 2010, covered in our post entitled 'Dare to Dream.'

The ‘fall’ season is now underway and we have got off to a smashing start with gold prices climbing to record highs and standing at $1266.85/oz, with silver prices standing at $20.56/oz as we write.

Gold prices have broken through their resistance level to head into uncharted waters with no overhead resistance ahead of them, so they could go a lot higher and do so in a short time frame. This is just what we expect to happen with much higher prices being achieved by the end of the year, which isn't too far off. We have also said in the past that silver prices will outperform gold prices before this bull market ends and in terms of percentage gains we can see that over the short term this is starting to happen.

With this in mind we revamped our strategy recently by reducing our holdings in some of our gold and silver producers in order to buy more of SLW stock and have some cash available for options trades as we identify them. The objective being to boost our financial position as we have been doing with this stock, with gains of 103%, 106% and more recently 79%. We acquired more SLW stock on 9th August 2010, for an average cost of $19.76 per share, which appeared a tad expensive at the time, however, they now stand at $24.82 giving us a paper profit of 25.54% in a little over a month.

At the moment we utilize the recommendations as stated in our premium options trading service to boost our returns along with the occasional more cavalier trade being posted on our sites.

So, on the 8th September we took the plunge and acquired a spread of Call Options on our favourite stock, SLW, with the following purchases.

December 2010 $26.00 Calls @ $1.55, now at $1.69 for a gain of 8.08%
December 2010 $30.00 Calls @ $0.58, now at $0.62 for a gain of 6.25%
December 2010 $35.00 Calls @ $0.18, now at $0.20 for a gain of 3.77%

and

January 2011 $26.00 Calls @ $2.00, now at $2.30 for a gain of 4.79%
January 2011 $27.00 Calls @ $1.64, now at $1.70 for a gain of 2.80%

Once purchased, Silver Wheaton then dipped slightly with a knock on affect sending our options lower, nothing like a poor start to terrify ourselves and send us back to the drawing board, however, we had no reason to change our stance so decided to stick with it. And we are happy to be holding onto these contracts as silver prices do appear to have come to life right on cue.

Finally make sure that you have positioned yourself to take advantage of what we think will be a good rally in both gold and silver prices, right up to January 2011, with a possible dip around mid October, but don't count on it.

We hope that this little note helps along with all the other data and opinions that you are reading and digesting.


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 $24.82.

The Company has a market capitalization of $8.54 billion, with 344.00 million shares outstanding, a 52 week trading range of $10.52 to $25.35 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 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.

On Friday, 27th August 2010, we closed another successful trade banking a profit of 79.46% on Call Options on Silver Wheaton.

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, with more positions opened yesterday. Drop by and take a look.


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.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.





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Reader Comments (7)

Hi there,

Great tips and info here- - appreciate it - -I am new to investing in stocks and have never done before - - Do you recomend a Broker i could use to invest in SLW too? I am Here In Ireland.

Any advice would be appreciated

Thanks

JOSEPH

September 16, 2010 | Unregistered CommenterJoseph Rooney

JOSEPH,

You could try one of the web based trading companies, there are a few around, but as we are not financial advisers we are not qualified to give such advice. This site is about what we do and the subscribers have a standing invitation to add their two cents worth and different views, without which it wouldn't be worth hosting.

September 18, 2010 | Unregistered CommenterSilver Prices

Hey - -thanks a lot appreciate ur reply :)

cheers

September 18, 2010 | Unregistered CommenterJoseph Rooney

whats best long term, silver coins, mining stocks, others? thanks

October 4, 2010 | Unregistered Commenterwilliam newton lee

William,

It would be unfair for us to try and advise as we dont know your circumstances, aversion to risk, etc, we hold the physical metal along with some stocks and we are more and more using options to boost profits. But its not everones cup of tea.

October 5, 2010 | Unregistered CommenterSilver Prices

Hey again Guys -- - I want to bounce this question of you as i think it holds some weight especially to a novice like me :) - - -I am about to invest in silver both physically and thru shares - but My question is this- When I decide to sell my physical silver anticipating the end of the precious metals BULL market down the road in a few years - -Who would buy them? I mean if other people especially dealers are likewise aware the metals market has been appreciating then wont they themselves be more interested in selling like me and not buying? Or I am been Naive here?

I would just like your 2 cents advice on this - -It would be greatly appreciated as I'm just starting out.

thanks again and love your genuine letters

Joseph Rooney
Ireland

October 7, 2010 | Unregistered CommenterJoseph Rooney

Joseph,

When the time comes we will all have to face these decisions of when to sell, an exit strategy will be required and each one of us will have a slightly different view and therefore a different stance regarding the disposal of silver.

None of us will get out at the exact top, its up to you to set reasonable profit levels as you think fit and then plan accordingly.

We will state what our exit strategy is when the time gets here, but that will suit us and may not be everyones cup of tea.

October 7, 2010 | Unregistered CommenterSilver Prices

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