Today, I put in orders to Sell To Open (STO) 320 November Put options at $5 a share and for another account (STO) 175 November Put options at $5 a share, for the orders I asked for $1.35 a contract. I've gotten a partial fill so far, which means that my buy in price in case of assignation will be $3.65. It amazes me that I can pick up SLW at these prices. Folks think we are going into a depression?
In case of a fill, I'd pick up $66K in premiums. I'll use the Put premiums, to write more Put options and so on.
Today, I STO 635 SLW March 09 Covered Call options at a $5 strike price. I got $1 in premium. (Total of $63,500.) These shares had an average buy in price of $3.60 -- this was the result of shares being assigned to me when I STO $5 Call options. With the $1 premium, this drives my purchase price down to $2.60. If by March, my SLW shares are Called away at $5, I'm a happy camper. (I expect that to happen.)
I also STO 40 SLW March 09 Covered Call options at a $7.50 strike price. I got $0.50 in premium. (Total of $2,000.)
I also STO 64 SLW December 08 Covered Call options at a $5 strike price. I got $0.15 in premium. (Total of $960)
My plan is to use the Casino's money (options premium) to buy more SLW shares (hopefully a bit lower then $4) and increase my holdings by approximately 25%.
Then on my new holdings, to write more Covered Calls and lever up.
A nice return for the four month period. Even better if the shares are assigned away.
i sold 10 dec 2.50 puts for .30 this morning.the bet now is whether they go out of business or not .they only have six people working for them is the whole premise real will there partners really produce.i have to wonder.i liked when gold corp was producing about 600,000 oz a year and trading at 10 now producing 5 million and it hit 13 today.gold was 250 now 700.whats real anymore?????? how much margin are you on i mean maintance???????
Today, I fudged a bit. I got two fills on Sell To Open (STO) (60) + (30) November Put option orders at $2.50 a share. I did as badly as I possibly could and collected .20 cents a share or $1,800 in premiums. That brought my number of Put option contracts up to 635 November Put options at $5 and 90 November Put options at $2.50 strike prices.
My thinking is in case of a tank and shares are put to me at $2.50, I'll be able to write $2.50 December Call options as well as $5 December Call options and command some premiums...
If we stay in our current $3.40 - $4.20 range the $2.50 strike options expire harmlessly leaving me with a little powder for December. Now we need a fabulous earnings report and a rally above $5. When factoring in commissions and fees I've collected $88,568.04 in Put option premiums. Either I'm going to own a lot of SLW shares(!) or its going to be a very Merry Christmas!
If SLW goes to $2 a share, I suspect that the Call premium will only be $0.10 cents a share at the $5 strike price for the nearest month and I'll be holding SLW for a few quarters. If SLW can float around the $3.50-$4.50 price range, then the $5 strike prices will give a nice $0.30-$0.60 cents in premium. It seems I'm currently a "favorite" to hold around 70,000 shares by November's expiration. In the latter case the monthly premiums will allow me to buy more shares and write more Call contracts. In the former case, the monthly premiums will be much less (of course) but maybe in that case, I'll use the premiums to buy Silver Eagles (should they become available at spot plus $2)? That too would work well.
Long term, in five to ten years, we will see $25 an ounce for Silver. No doubts. Today, we are witnessing massive delveraging by hedge funds and banks. This is likely to continue for a few more quarters. When things "sort themselves out" I've no doubts that precious metals will be in demand.
These days I'm also keeping an eye on the price of platinum which is becoming more attractive.
PS: I liked the 'don't know' disclosure sentiment comment. In truth, I don't know either. But I feel comfortable hanging in the precious metals arena even if it is getting crushed at the moment. After the bear is over, PM's will be the first to rally.
hope you win or are very wealthy and need a tax write off.when ever its to good to be true its usually too good to be true .there is high risk in your pos .just realize it.anything can go wrong.silver goes to 3.90.what are you going to sell those 5 for then if stock is at 2?????