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« Debtflation | Main | Ben Bernanke boosts gold and silver prices »
Friday
Sep242010

Silver Wheaton Corporation Call Options Update 25 September 2010

SLW Chart 25 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 Silver Prices: Dare to Dream.

The ‘fall’ season is starting to tick with both silver and gold prices off to a sparkling start with gold prices climbing to record highs and standing at $1297.00/oz, and silver prices standing at $21.46/oz, a new recent high 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. The Federal Reserve have announced their intentions to stimulate the economy with quantitative easing and the Bank of Japan have intervened to stop their currency rising any further, the race to the bottom continues for currencies.

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 if we look closely 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 $26.60 giving us a paper profit of 34.61% 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 trade being posted on this site.

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 $2.62 for a gain of 62.44%
December 2010 $30.00 Calls @ $0.58, now at $1.00 for a gain of 68.64%
December 2010 $35.00 Calls @ $0.18, now at $0.28 for a gain of 45.28%
and
January 2011 $26.00 Calls @ $2.00, now at $3.00 for a gain of 48.98%
January 2011 $27.00 Calls @ $1.64, now at $2.50 for a gain of 51.18%

Once purchased, Silver Wheaton Corporation then dipped slightly with a knock on affect sending our options lower, options trading can be volatile, however, we had no reason to change our stance so decided to stick with it. 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 not if the shorters throw the towel in.

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 $26.60.

The Company has a market capitalization of $9.15 billion, with 344.00 million shares outstanding, a 52 week trading range of $11.65 to $27.04 with an average volume of 4-5 million shares traded, although spikes in trading have seen 14 million shares change hands and this week the daily average has been around the 10 million level.







Over in our options trading den they have updated the chart to show all the closed trades as of today, so you can see exactly how it is going, please click this link.



OptionTrader Profits





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 (32)

Take the profit and run away, can you see the bubble of the stock or you are blind? SLW value is much less than
$27.04, even if the Silver price going $23. I've lost the shirts with call option of Suncor in May/2008 when Oil price was $ 120 and SU stock was $ 72 till July 17th/08, oil price hit $147 and Suncor stock was $ 52. Well even if Silver price will going up 10%, doesn't mean that SLW will flying up forever. I'm bull about silver price but about SLW stock is alredy in bubble over $ 22.
Good luck if you think that SLW will going $ 45 like value of Barick Gold!

September 25, 2010 | Unregistered CommenterMike SR

A word of caution. Silver and gold retreat in Octobers over 70% of the time. The dilema this year is whether they will do so again this year or will it be the30% time when they do not. Should we hold on and ride out any drop or sell out and buy any pullbacks? and then miss a continuing rise. I for one cannot make up my mind

September 25, 2010 | Unregistered Commentersilver bug

Mike,

Thank you for the good luck wishes, very much appreciated. For what its worth we are of the opinion that silver prices are set to go a lot higher, $23.00/oz next and then onto $30.00/oz, hopefully by the end of the year. If we are correct then the stock price for SLW will boom, hence we are overweight on it having bought more stock recently and yes we have high hopes too for the Call Options that we have purchased.

IF you are looking for a few different ideas on options trading then why not give our options trading a service a go.

September 26, 2010 | Unregistered CommenterSilver Prices

silver bug,

Your question is on everyones mind and its really difficult to answer. We are taking it one day at a time right now, the dollar has just had the kiss of death from Helicopter Ben and the Bank of Japan is trying to devalue as well. The interest in gold and silver is on the increase and will attract more investors as the alternatives are about as much use as a chocolate fire guard.

If silver prices really spike we may take some money off the table, however, we have waited a long time for a set up such as this and wish to maximize our gains. To get in and out fast at the exact top and bottom of the move is asking a great deal of anyone, so its not something we can recommend at the moment.

We will keep you informed as we hope you will take the time to comment from time to time which really does help all of us.

cheers,

Bob K

September 26, 2010 | Unregistered CommenterSilver Prices

HA, Silver bug!
$ US had kissed the death even in March/2008 when index value slammed to 70.7 and now currently is about 79.3.
In March/2010 Silver price hit $21.44 and within two weeks
slammed back to $16. Today current high of Silver is
$21.51. Silver Wheathon stock during the March/2008 high hit $19.54 and within two weeks slammed back to $ 14.77.
The SLW price hit $ 27.04 in Friday, Historic high ever, after 60 days unstopable railly.
Current World Demand of Gold and Silver is much less then May/June 2010.Check the contracts volume.
Also check the charts of Oil price between May/20th to July/20th/2008 and Suncor stock. That period Oil price
from $120 jumped up 22% and Suncor had falled 30% down.
However Stock Market is very tricky and SLW must hit 50 days/MA which is $ 21.50. OK
I wanna bet with you that next 4 weeks will see pullback on Silver price about $19.90 and SLW stock must hit $22.

September 27, 2010 | Unregistered CommenterMike SR

Mike,

If I lived near you I would take the bet.

Bob K

September 27, 2010 | Unregistered CommenterSilver Prices

Wow Bob K,
Are you serous about this Mardoff stock SLW?
I'm Canadian and if anybody in the world know what company is SLW than will not pay for this crap $ 3.
However the last 20 months SLW had made bubble from $ 2.70 to $ 27.04 and this stock had gained
like rocket with no any fundamentals because still make profit about $ 50mil and P/E= 500.
If you still read Propaganda how much production "WILL BE" in 2011 or 2012 etc. than you are in denial.
I'm bull on Silver price that ETF-SLV could hit about $ 23,
but SLW stock is over,over valued.
OK, what is your target of SLW till December/2010? $28,$29,$30,$50,$500?.
AGAIN SLW and ETF-SLV is different, and I've told you how Suncor had srewed me from May/20th to July/17/2008 expiration option day.That was the biggest bull market in History on OIL ever and many "favorite" stocks like SU, Yamana,Petro Canada, even SLW went in the toilet.
However,Still 50 days moving avg. is $ 21.50,and
200 days/MA is $ 18.20.
From July 28th/2010 you can see how many waves upside 6-7?
SLW anytime must hit 50 days/MA or 200/MA.
If I can see this crap $ 29.50 soon(till Nov),I would short to death,with all my money.

September 27, 2010 | Unregistered CommenterMike SR

Mike,

I can feel the passion in your argument and there might well be an opportunity to short silver coming along, however, this is a bull market and shorting it is dangerous at the moment. But thats just our opinion. SLW has the added advantage of a fixed buying price, so as silver prices rise the bottom line for SLW improves and so we place our bets.

As you know we have a bunch of Call Options on SLW and time will tell if we were wrong or right to take this route and as you also know we do get it wrong from time to time.

Please let us if and when you go short, it'll give us all food for thought.

September 28, 2010 | Unregistered CommenterSilver Prices

He,he did you see bro Mike!
Silver today hit $21.685/oz and where is SLW still in red
$26.40. I did short on SLW option OCT/10 yesterday.
Strike $24, I bought 60 contracts with 27c, and I sold today for 47c. Thank you $$$ 1,060.

September 28, 2010 | Unregistered CommenterMike SR

Geeez, Silver $ 21.775/0z and SLW $ 26.29 (-1%).
Did you learn from Wall Street banksters something.
Do you wanna bet Silver $ 30 and SLW about $19.

September 28, 2010 | Unregistered CommenterMike SR

Well, it seems everyone is getting a little hot under the collar.Of course SLW will retreat from time to time but the trend is still up. THe question is are there other silver stocks about to break out which will give a better return. So let us have some ideas. Let us move on from SLW. What are your thoughts on Hecla mining ?

September 28, 2010 | Unregistered Commentersilver bug

Mike,

Good move and well done, its not something that we could recommend as you have to be in and out rather quickly. A move that is In one day and Out the next would probably be missed by our readers as it would be dependent on just when they clocked in to have a look.

However, our premium service does send out its buy and sell instructions while the market is open, so that the subscribers can get get into position quickly.

September 28, 2010 | Unregistered CommenterSilver Prices

Well Silver bug, Hecla has downtrend from last December/09.
I think till January/11 can hit $4.50, but if next 3 days will hit $6.49 than target $ 6.90 next week.
SLW still has uptrend and next 3 days are crucial.
If SLW make breakout over $ 27.05 than probably will going to $28.5 or $29.5 (I would short long SLW on this price like crazy on strike $25). However thanks god I was lucky today about my puts on SLW.

September 28, 2010 | Unregistered CommenterMike SR

silver bug,

Good suggestion, we do need to keep our heads and keep our cool and have a good look at the rest of this sector so we are open to everyones suggestions and observations. In terms of % gains it will be a stock that has been over looked and is lagging behind right now that could catapult forward and catch up with the pack

September 28, 2010 | Unregistered CommenterSilver Prices

Team,

Also note that after a negative start Silver Wheaton has moved back into positive space with a gain of 20 cents as we write and silver is up 29 cents - we still havent the nerve to short this market and will stay long - but thats just our very humble opinion.

September 28, 2010 | Unregistered CommenterSilver Prices

Team,

On the NYSE Silver Wheaton has just closed up 23 cents or 0.87% to finish the day at $26.77.

It will be interesting to see how it performs in the 'after hours' trading, will it continue to rise or take a breather, one thing is for certain, I need a breather, what a great day to be a silver bug!!!!

September 28, 2010 | Unregistered CommenterSilver Prices

My apologize about SLW, Today on the pre market manipulative SLW hit $ 27.08 and I think till Friday could easy hit
$ 28.20, $28.50 or maximum $ 29.50 if Silver price jump up over $ 23.50.

September 29, 2010 | Unregistered CommenterMike SR

However,this game maybe even extended till Oct/12/2010- Oct/20th/2010 because of Option expiration week and if the banksters killing the shorts than Gold price target $ 1380- $ 1465 and Silver $ 23 to 26.50. But be ready that many stocks will turn down at least 3-7 days before top.
Why is this game- simmple making MONEY from short sellers.
The same cikus we've seen in May/2010 when they crashed the Oil and Energy shares and everybody knows that last 11 years nine times Energy was bull in May (odds 10:1).
The same odds with Gold/Silver bear market had seven winnings(7:3) in October.

September 29, 2010 | Unregistered CommenterMike SR

The same ciRkus we’ve seen in May/2010 when they crashed the Oil and Energy shares and everybody knows that last 11 years nine times Energy was bull in May (odds 10:2).
I've read after the top of Oil $ 87 in April/10 everybody was bull and 1000:1 had calls on May price $ 92.
The same odds with Gold/Silver bear market had seven winnings(7:3) in October/10.
If we see this scenario than I'm positive Nov/Dec will be opposite than 2009.

September 29, 2010 | Unregistered CommenterMike SR

Hmmm, bad openining on the market today. First hour
sell-off, stocks,commodities? SLW must close today above
$ 26.76 to 4.00 pm. And I think will make it.

September 29, 2010 | Unregistered CommenterMike SR

Guys, I hate this stock SLW, but I like you Team and Bob.
C'mon SLW close today $ 27.09.
About Hecla, sorry silver bug.

September 29, 2010 | Unregistered CommenterMike SR

Again about odds!
Best September since 1939, (from Sept/01th/1939 officialy was start of WW II)!
http://www.marketwatch.com/story/best-september-in-more-than-70-years-2010-09-29?link=kiosk

September 29, 2010 | Unregistered CommenterMike SR

SLW closed at $26.99, adding 24 cents for a gain of 0.90%, so not too bad for a fairly flat day.

September 29, 2010 | Unregistered CommenterSilver Prices

I hope that Team guys this morrnig had sold calls of SLW and SLV,because I couldn't be so much patient. After two/tree days even I can't sleep .
Wow, brutal correction today DOW from 10,949 points slammed down 200 points and SLW from $27.24 to $26.05 (-4%).
I just started to be bullish on SLW and look at the crap!
I hope that SLW will not going below $ 26.00. I'm still bullish because bankers must kill the puts on GLD,SLV till October expiration week,or maybe I'm wrong?.
For next railly on SLW targets $28.5 or $29.5 we have to see closing above $ 27.04.
I still have feeling that till mid-October we should see at least $ 1348 Gold, and $ 23.5 Silver.(because I love to short shares))
Look at the banksters shorts today:
http://www.marketwatch.com/story/investors-cash-out-to-end-a-great-third-quarter-2010-09-30

September 30, 2010 | Unregistered CommenterMike SR

Mike,

We havnt sold anything, all of our trades are posted on site as we make them.

September 30, 2010 | Unregistered CommenterSilver Prices

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