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« The Accumulator Trade 1 Update 01 March 2011 | Main | Hecla Mining Company Up 6.94% Today »
Sunday
Feb272011

The Accumulator Trade 1 Update 28 February 2011

SLW Chart 28 February 2011.JPG

We currently have a position in the Silver Wheaton Corporation (SLW) which consists of 200 number, March 2011, Call Options, at a strike price of $42.00 for an average cost to $2.19 per contract. These contracts closed on Friday at $1.40 so we are still under water with the clock running down rather quickly as they expire on 19th March 2011.

In order to break even we need to see SLW trade at around $42.50 in the coming week, the shares closed at $40.63 on Friday having experienced dramatic movements in both directions. The all time for SLW is $42.34, so if it can break above this level then it is in uncharted waters and could go on to rally to much higher ground. However, our immediate concern is one of damage limitation with the possibility of breaking even as we have had a torrid time with this trade.

Taking a quick look at the chart we can see that we are on knife edge with SLW posed to either form a double top and then pull back or if silver prices rally, SLW could make a new all time high and possibly rescue us. The RSI still has a little room to move higher along with the MACD and the STO looks like it has once again turned positive. Of course everything depends on silver prices which in turn are sensitive to a myriad of factors including; gold prices, oil prices, the dollar and world events where the middle east in occupying center stage.


Background:

The first trade for this Accumulator was opened on 16th December 2010 as follows:
Purchased 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.


The Accumulator Trade 1 was then updated on the 11th January 2011 when we took the following action:

As we know silver prices experienced a bout of profit taking and Silver Wheaton promptly fell out of bed taking our Call Options to the wall. Well we have watched it and are of the opinion that silver prices will soon head north along with gold prices. This action should in turn lift our favourite stock out of the doldrums and hopefully set us on course to $40.00 plus and soon.

So late in today’s session we decided to average down in an attempt to salvage the situation by increasing our position, which we did with the purchase of another 100 contracts of Silver Wheaton Corporation (SLW) March 2011, Call Options, strike price of $42.00 for $1.09 thus reducing our average cost to $2.19 per contract.

In terms of a way forward our strategy will be to place a sell order for half of the these contracts at around the $2.30 level and hope to catch a spike in prices. The other half will be held while we observe the situation and try and anticipate just how the next few days will unfold.


PS: Just in case you missed it we have just closed an option play on www.silver-prices.net with an average profit of 96.5% on Silver Wheaton Call Options. Click here to read more.


Many thanks to those of you who have recently signed up for options trading service, its very much appreciated. Please be patient as we have a number of new trades on the drawing board and as you are aware the timing of them is critical to their success.

We now have 65 winners out of 67 options trades, or a 97.00% 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 19 Feb 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.

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