Silver Wheaton

Its been a fun couple of weeks with Silver Wheaton (SLW), just to recap on May 1st I have bought 400 shares of SLW for $24.10 per share and quickly sold the $25 covered call for .42 cents per share, expiring May 17th. with the last trading day being May 16th.

Those options had expired and today I have written another covered call for the June 21st expire. The only issue is that I decided to go with the $24 contract and not the $25 as the premium was higher for this contract. As such, I have written the call and have gotten filled at $ 0.51.

For this month I've collected $188.00 net and if SLW share price runs up and over the $24 mark it'll be sold causing a loss of $0.10 and share.

Best case is for the shares NOT to be called away at $24, as this would give me the maximum return of 1.95% for the month and IF it gets called away it'll be the worst case, which limits the return to 1.54%.

Bought at                              $24.10
May covered call $152.00        0.38
June covered call $188.00        0.47       
Total collected     $340.00        0.85      3.53%

In either case it still is better then the yearly dividend of 1.257%, based on my purchase price.

Lets see what SLW has in store in the next 4 weeks. Till then happy trading.

Silver Wheaton (SLW) is traded on the New York and Toronto. SLW is a precious metal streaming company. Currently SLW has remained within a trading range between $20 and $30 dollars over the past year. SLW current dividend is 1.257% not very high but still its something. Since I'm looking for a short term holding period I'll take any dividends that come to me during that time.

The one year chart (above) shows that the trading ranges are strong at $24 and $30 with two slightly weaker resistance lines at 25.50 and 28. Currently SLW is trading at the lower end of this range just above the $24 dollar resistance level.

On the 5 year chart we can see two resistance ranges of $22.50 and $30 and two lesser resistance lines at $20 and $40. When comparing the two we can see that the $24 range would be something to watch for as if it breaks below this point the stock price may dip down to test the $20-$21 but, lets hope that we're in and out with a great return.

Today I had purchased 400 shares at $24.10 for a net cost of $9646.00. I quickly sold a call for the May 17th expiry for the $25 contract price and collecting a premium of .42 per share, netting me $152.00. To date I have captured 1.58% regardless if the stock moves above the contract price of $25.

The $152 is really going to be my worst case for this period. For the worst case to occur SLW would remain under $25 per share between now and May 17th.

Best case though is a little better as I bought it at $24.10 and sold it at $25 grossing me 0.90 per share plus 0.38 per share from the premium for a total of $1.28 as a percentage it'll work out to be 5.3% gross for the 16 days.

The TFSA as some cash available if this stock declines. Once again the rules with apply, if the stock declines by 10% I'll look to purchase some additional shares to lower my average. I'll continue to write covered calls, earning me a cash flow that is better then the dividend. If your wondering about the cash flow vs the dividend the current dividend as mentioned earlier is 1.257% per year and on the first option trade I have already collected 1.58% and the contract is only 16 days in duration. If your wondering about annualized rates it works out to be 36.04%

Lets see what Silver Wheaton has in store for us in the coming months.

Till next time Happy Trading