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« A Bumper Day for Silver producers | Main | Endeavour Silver Corporation: Lucky 7 »
Monday
Jan242011

The Accumulator Trade 1 Update 24 January 2011

SLW Chart 25 Jan 2011.JPG

A quick look at the chart shows that SLW has fallen back around $10.00 on the back of falling silver prices. The technical indicators are now firmly in the oversold zone with the MACD and the STO at there lowest point for some time and the RSI at 32.77. Also note that the gap between the stock price and the 200dma has returned to more acceptable levels.

The first trade in this Accumulator was the Purchase 100 contracts of Silver Wheaton Corporation (SLW) March 2011, Call Options, strike price of $42.00 for $3.30 for a cost of $33,000.00, which we opened on December 11th, 2010. Silver prices have since been clobbered with Silver Wheaton being sold off aggressively rendering our our Call Options just about worthless. This is a very disappointing start to an accumulator and we must hold our hands up and tell you that we blew it completely. So for us its back to the drawing board to observe the markets to try and ascertain what lies ahead.

We did say previously

“Should idea this be a disaster then its back to the drawing board for us.
Our normal trading activity will carry on as per usual.
This exercise is not part of anything that the www.skoptionstrading.com chooses to do.
Please regard as a bit of fun where we get to sweat and you get to chuckle.
Your decisions and your operating criteria is exactly that, its yours, your responsibility, you are accountable for your own actions, so go gently with them.”

and those words still stand.

Still on the topic of silver you might want to see this interview on BNN with Eric Sprott whilst in Vancouver, who said that he thought that Silver will be the metal of this coming decade.

Eric Sprott 25 Jan 2011.JPG

Please click this link to to see the interview in full

Also James Turk on King World News made the following comments:

Silver is in backwardation not just in the short-term, this time it is extending twelve months forward! 

The last time this happened Eric was in January of 2009.  Over the next few weeks silver rose from about $10.50 to $14.50, a roughly a 40% move higher.  The key to understanding backwardation is that the price must rise to entice holders of physical metal to sell and accept a national currency in return.  I think we can expect a similar event to repeat over the next few weeks. 

A similar type of move would clearly put silver well above its previous high.  What this backwardation shows is that there is a disconnect between the physical and the paper markets in silver.  As I said previously, the silver shorts simply cannot hold the paper price down here any longer without seriously discrediting the paper silver market as a price discovery mechanism.




................................................................................

Over in the options trading pit we have just closed 3 more winning trades, so we now have 62 winners out of 64 trades, or a 96.87% success rate.


If you have any questions regarding these trades please address them through their site where they will be handled quickly and I hope efficiently.


sk chart Jan 2011.JPG


The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today, before we decide to cap membership.

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.


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 (15)

Did you sell all your contracts? Or are you holding on hoping to salvage something?

January 24, 2011 | Unregistered CommenterGreek Fire

Like Silver-Prices honesty, which you don't hear very often in the stock/commodity industry. You often hear only the gains!

I'm looking to exit my second tranch (first sold with 60% gain) of 20 contracts bought at $0.62 per...we will see a bounce after this "regression to the mean" is finished, the only problem is the time decay issue.

January 25, 2011 | Unregistered CommenterMark

Hi...
Just want to thank you for your great news letter on SILVER/GOLD/Uranium.

But I want to especially thank you for having enough honesty and integrity to say that you "blew it" regarding the
SLW - March Call Trade.

It is refreshing to have someone make a mistake and admit it. I am so tired of trading services and newsletter writers
who "hedge" and pretend they didn't make a "bad call."

Better times ahead...hopefully,

Best,
Larry

January 25, 2011 | Unregistered CommenterLarry

Thank you for your kind words they are very much appreciated. we will take stock and come back fighting.

January 25, 2011 | Unregistered CommenterSilver Prices

So what are your plans for this trade? Hold? Averaging down again? What level are you looking at to sell if that time comes?

January 25, 2011 | Unregistered CommenterBrad

Brad,

COMEX expiry is on the 26th January 2011, plus there is a FOMC meeting so we will wait for those two events to pass and take it from there.

January 25, 2011 | Unregistered CommenterSilver Prices

He,he your options of SLW,$33,000 today have value $ 1,600 plus service fee of selling of 100 contracts, you'll have less than $1,500 AND your profits are gone from $27,138 and all your trades 62 trades, today your pockets are empty, LOSS $5,000. Plus 100 contracts from $1.60.
It's catasrophy of your portfolio.
Why, because you had very unusual LONG position, about FEBRUARY HIGH of Silver?

January 26, 2011 | Unregistered CommenterMike SR

I told you so, I lost my shirts in 2008 about $125K, with options of Suncor between May to July/08. Oil price had 20% increased and Suncor had fail 25%.It's Unlogic,but true.

January 26, 2011 | Unregistered CommenterMike SR

Mike, That's too bad about your loss...my worst loss of $18k was in 2008 on a small stock OIL TSX - I'll use the bogus "financial crises" as my excuse, but really, I could have sold only months earlier and taken that money off the table.
In defense of Silver-Prices, I'd rather take a $33k loss than a 125k loss - talk about catastrophic.

Options is a different game with time decay always running against you, you can lose your shirt(s), no matter what the stock price does.

I think it's fallingman who recommmended credit spreads and/or writing further out calls/puts on stock that you already own...they do work - not as much upside but a steady stream of income is the result.

January 27, 2011 | Unregistered CommenterMark

It may be very early to say this but, it looks like SLW is slowly moving up into a trading range/sideways move.
Also of note is the open interest on SLW is ~5,700, reflecting no major selling of the $42 Calls - actually there has been a small net gain in buyers since the major price drop.

January 31, 2011 | Unregistered CommenterMark

Well JUST MY LUCK - I make it a habit to NEVER subscribe to these types of trading systems and low and behold, I finally do subcribe to THIS one (Accumulator AND regular subscription), and I am down thousands on these trades. How can you proclaim to be 62 of 64 and the SECOND I just on board, it all goes to hell? Tough pill to swallow...I should have listened to myself in NOT subscribing/following stuff like this. I knew there was a reason why...

February 11, 2011 | Unregistered CommenterBrad

Brad,

If you read the articles that we posted leading up this Accumulator we did stress that it was not to be tried at home and it was to be regarded as a fun thing. This site tends to be a bit cavalier with this sort of trade, however, this time it went pear shaped.

Our options trading team work to an exact criteria and they are now 63 out of 65, that's a service that you do have to pay for and it costs $99.00 and can found by following this link:

http://www.skoptionstrading.com/

We cant win them all and we don't profess to, but our record is there on the site for all to see, where else do you get that sort of transparency?

February 11, 2011 | Unregistered CommenterSilver Prices

I am also SUBSCRIBED to THAT service as well...of which 2 GLD trades and one SLW trade are substantially down as well....each GLD being down over 50%. So Accumulator or not, the 8% gain in SLV doesn't even come close to the loses of the others...even averaged down.

All I am saying is that it really rattles someone when they buy into a service and are down thousands in the first month of being subscribed....when you buy an option for $2.28 and it drops to $0.74, or how the Accumulator can drop from over $3 to under 30 cents...it does make people wonder how a team's criteria didn't see this coming...We aren't talking about 25% loses here, but 50-90%...painful, especially for people who can't just throw another $30,000 at a trade to make up for it.

Believe me, I am on your side...I was before because I wanted to be, and I am now...more because I have to be.

February 12, 2011 | Unregistered CommenterBrad

am still waiting for my internatinal trading account to be set up, then just might jump into these beauties, or should i wait for the next trade? am apreciating the comments,and am not unmoved by the hurt.

February 15, 2011 | Unregistered Commenterifonly

Gary,

I take your point and agree that big cyclical moves in a secular bull market erase all timing errors many times over.

However, when after-market and "buy on the open" orders are left overnight, traders will not close the spreads until they have cleared their order book. The wide spread at closing is just a standard practice like a spider spinning his web at night. The trader comes back in the morning to see what stumbled in… and for him… it is free money with no work involved.

Personally, I don't believe in giving traders one penny more of my money than they take already.

We tell investors to just stay put for the first 10 to 15 minutes in the morning. Then go ahead and place their buy and sell orders. With rare exceptions, they come out ahead in the long run.

Best regards, Steve

February 15, 2011 | Unregistered CommenterSteve

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