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« The Accumulator Trade 1 Update 02 March 2011 | Main | The Accumulator Trade 1 Update 28 February 2011 »
Monday
Feb282011

The Accumulator Trade 1 Update 01 March 2011

slw chart 01 march 2011.JPG


Its a rare occasion when we stand up and cheer the screen as though it was the Derby or the Melbourne cup, but we cheered Silver Wheaton Corporation (SLW) today. We were looking for a super human effort from this $14 billion enterprise, in that we needed a one day gain of 5% to trigger our sell order and momentarily we got it and bang our order was filled in the dying minutes of today's trading session on the NYSE.

Yesterday we laid out our strategy as follows:

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 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.


SLW closed with a gain of 4.73% and our call options closed with a gain of 64.29%, just shows you how much volatility there can be in options trading.

So, we have now disposed of the first 100 contracts for a small profit of around 5% which leaves us with 100 contracts and just 19 days to the expiry date.

Next a quick look at the chart where we can that SLW has made a new all time high today, so the question is can it rally from here. The volume remains fairly solid, there's a tad more juice in the MACD and the RSI is sitting at 69.75, once above the '70' level we will need to tread very carefully indeed, as some investors use this point as a sell signal for themselves, regardless of anything else. All in all, we could see further gains over the next few days, however, should silver prices take a hit then we will fall back just quickly as we have bounced up to this level. Its not so much about trying to make a profit at this stage more about coming away from this trade as intact as possible and living to fight another day.

It would also be wishful thinking on our part to expect the squeeze on the shorts to cause some short covering over the next day or two, but stranger things have happened. To be short in this market right now is the stuff of nightmares, we have been posting warnings to that effect all along.

As we write we do not have a plan, but we are working on it, after all it is our money that is on the table as well as yours, We'll have a good nights sleep and see what tomorrow brings.





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.

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)

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Reader Comments (5)

Some banter that went on today:

Bob: Why not just "roll" out to another month and save the trade? Just a thought. ;-

Marc,

We are hoping to get just a little more out of it, but its such a close call - your suggestion is a sensible one and point taken.

All the best

Bob K

Marc,

Just hit $2.30 so our order to sell half of the position has been filled, phew!

Best,

Bob K

Super move in SLW w/ 5700 vol. and volatility @ 48. Looks like this rabbit will come out of the hat yet w/ some "lettuce" in his mouth and profit to roll for the next accumulator!

I have to hand it to you and Sam being so precise in your timing.

Patiently waiting for the next trade.
All the best and thanks for the update.
marc_

February 28, 2011 | Unregistered CommenterSilver Prices

well...isn't it great that you are all cheering when subscribers are pretty much on the sidelines. Disappointing to say the least...then you gott a rub it in.

Why were there no comments/recommendations for the Accumulator for so long? I thought you had given up with no goal/sell point or expectation. A little more communication to your subscribers would be appreciated....that's what we are paying for.

March 1, 2011 | Unregistered CommenterSimon

Simon,

We told you what we were buying.
We told you that we were under water
We told you that we were averaging down
We told you that we had set an exit strategy
We told you that we had sold half of our position

If you have traded differently to us then surely its down to you.

Finally, the Accumulator is run on our site which are FREE, so you are not paying for it.

March 1, 2011 | Unregistered CommenterSilver Prices

All I am saying is that in your subscription we are 80% cash, sold our SLW & SLV positions long ago because of the "Trapped Longs in the Options Market", and no new SLV or SLW positions are running. These positions were sold before the middle of February. $30 SLV (April) Call was sold on February 8 at $1.42, and $40 SLV (June) was sold February 15th at $2.75 for an 8% and 7% gain respectively. The $30 SLV closed today at $4.30 and the SLW closed today at $6.87. I am certainly not cheering "as though it was the Derby or the Melbourne cup". This is the subscription part. So this entire run for SLV and SLW resulted in an 8% and 7% gain when those positions are up something like 300% now.

The Accumulator had no updates pretty much the entire month of February, even though questions were asked in the comments section what the strategy was going forward on January 25th....nothing was ever answered...here is the section...

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

Comment by Brad — January 25, 2011 @ 9:22 pm

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.

Comment by Silver Prices — January 26, 2011 @ 12:02 am "

Nothing was heard from again until February 28th. We were left a month guessing as to what you were thinking/doing or what exit strategies you had.

So yes we were told what you were buying, and that you were under water. We were told on January 11th you averaged down. Then on January 24th, we got a message that ended "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", also with a bit of "we told you not to do this at home talk".

From there, nothing until February 28. What were we to assume? No communication for a month, even tho it was asked on January 25th what your strategy was.

Why would you sell $42 SLW June Options and $30 SLV April option before mid-February and hold these $42 SLW March Calls still? and if so, why make no comment about the Accumulator on that date or since then?

All of this has been a frustrating start to your service (since December I believe).

March 1, 2011 | Unregistered CommenterSimon

Simon,

SK options operates to a different set of criteria to this site. Because of that criteria they have had 65 profitable trades out of 67 and yes there will always be situations when they sold and should of held. There have been a few situations in the past when they sold just prior to a trade turning against them. The thing to remember is that this is not a 'sniper' approach to trading we are in it for the long haul and a consistent return on capital is a top priority. I think that it was Warren Buffet who said Rule Number One is not to lose money and with a 97% success our subscribers are not losing money. Please could you address your comments regarding SK options through their site and not here as they are resourced to deal with them and I’m not.

This site, silver-prices, tends to be more 'cavalier' in its approach to options trading and on occasions we have wiped out completely as long term readers will know.

For this site, yes, maybe we should have been more communicative with the accumulator, but there isn’t a lot to say when its flat on the floor, so rightly or wrongly we decided that patience was the best thing.

Today we have closed our position in the Accumulator, the last contracts were sold at $2.72, we will post on it today.

Hope that this explanation helps a tad.

March 2, 2011 | Unregistered CommenterSilver Prices

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