By Bob Kirtley
27 September 2010
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%
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.
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, signaling 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.
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Gold Prices makes no guarantee or warranty on the accuracy or completeness of the data provided on this site. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This website represents our views and nothing more than that. Always consult your registered advisor to assist you with your investments. We accept no liability for any loss arising from the use of the data contained on this website. We may or may not hold a position in these securities at any given time and reserve the right to buy and sell as we think fit.
Disclosure: SLW, GLD