Market Curiosity: Exploring Markets And Systems

January 19, 2011

Long SLW 33 calls +7%, sold Feb puts +97%

Filed under: +06 to +25%, +76 to +100%, Long Calls, Short Puts — Tags: , , — Jeff Fitzmyers @ 2:02 am

Long SLW Mar 33 calls at $2.88 yesterday.
Exit quickly if just a small bounce.

+ A hammer yesterday on the down sloping trend line.
+ Volume is decreasing.
+ The hammer was outside the lower Bollinger Band.
+ The gap from November 4th should provide support.
– Price did not find support on, or in the gap. So will the gap be filled in the future??
– I don’t like trying to catch falling knives.
+ Daily CCI is oversold and about to cross over to the upside the weekly CCI.
– Both monthly and weekly CCI are down trending.
– The silver shortage idea is well supported in multiple regions.
+ Record sales of Silver Eagles this month: (This apparently uses up most of the silver produced in the US.)

From US Mint American Silver Eagle sales have already scored their best ever January. Who would have thought? After all, there is still a full week left in the month. On top of that, the bullion coins are rationed, they were unavailable for seven days, and U.S. silver futures tumbled 8.1 percent last week (6.7 percent in London).

Yet, January 2010 is now in the history books. It is the best starting month of a year for the series that dates back to 1986. Despite all the aforementioned obstacles, authorized buyers scooped up 3,090,500 Silver Eagles from the United States Mint as of Friday, Jan. 22.

Why choose SLW? Silver Wheaton: A Double in Waiting? I selected the 33 strike price because I think price will bounce and then possibly retest the lows. So I don’t want to have far out of the money calls.

Jan 19th: Sold for $3.08, +7%. Sold because I wanted to let the gap fill. Will buy again if todays open is taken out. Otherwise price will likely drift down for a day or 2.

Also sold Feb 31 calls for $1.06. 🙂

References: Silver fundamentals suggest higher prices after correction

Jan 22: Feb calls now going for $1.64, -55%.

Feb 9: covered the short puts at 0.11 +97%.

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