The Money Tree

Safely Generating Income in Retirement

Update – Silver Wheaton (SLW)

Posted by mounddweller on May 20, 2012

Fellow Traders,

Here’s another update, this time on my position in Silver Wheaton (SLW).  You’ll recall I entered this trade on April 27th by buying 200 shares of SLW at $30.07 and selling two MAY $29 puts at $0.64.   This was my second trade using Ron Groenke’s new “Show the Trade”.  Like my CVX trade, it isn’t working out too well right now.  As a matter of fact I’ve already hit the stop loss limit on my long stock.  Back on May 7th the stock fell through my stop loss at $28.56.  By the time I sold it was at $27.45.  It subsequently fell to as low as $22.94.  It has since recovered a little, closing Friday at $24.63.  Thus, my use of a stop loss benefitted me greatly on this trade.

Like my CVX trade I decided to roll out and down my short puts.  On Friday I rolled my MAY $29 puts out to the SEP $28 puts for a net credit of $129.65.  This now leaves me a net loss of $293.40.  My plan is to continue to roll the puts as necessary to bring the whole trade to a profitable conclusion.

Here’s a current 1-year chart for SLW.

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2 Responses to “Update – Silver Wheaton (SLW)”

  1. max said

    try buying the puts not seling them. try in the money. your downside will be protected a lot more

  2. mounddweller said

    Max,

    I wasn’t selling the puts for protection. I was selling the puts to ‘super-size’ my trade. Instead of buying 400 shares of stock I just bought 200 shares and sold 2 naked puts. I believed the stock was going to immediately move higher, thus making my puts less expensive. Had the trade worked out they would have expired worthless or I could have bought them back for pennies before expiration.

    Regards,
    Troy

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