Silver Wheaton Corp. (NYSE: SLW) stock is declining nowadays, as silver futures are trading lower by more than 3%. whether you think that stock won’t be rising too far in the coming months, thereupon it could be a good moment to look at a bearish hedged play on SLW.

After hitting a one-year low of $8.83 final March, the stock hit a one-year high of $19.16 in January. that AM, SLW opened at $17.93. So far nowadays the stock has hit a low of $17.12 and a high of $17.93. As of 12:45, SLW is trading at $17.48, down 71 cents (-3.9%). The chart for SLW looks bullish and regular.

For a bearish hedged play on that stock, I would consider a June bear-call credit spread above the $22.50 range. A bear-call credit spread is an options position that combines the purchase and sale of sign options to hedge risk in case the stock doesn’t do

what you think but still leverage nice returns. that specific trade will compose an 8.7% return in three and a half months as faraway as SLW is below $22.50 at June expiration. Silver Wheaton would have to rise by more than 29% before we would start to lose money.

SLW hasn’t been above $20 at all in the past year and has shown resistance around $18.50 recently. that trade could be risky whether the price of silver and other precious metals continues to rise at a meteoric rate, but even whether that happens, that position could be protected by resistance SLW might find just above $19, where the stock topped out back in January.

Brent Archer is an options analyst and writer at Investors Observer. At publication moment, Brent neither owns nor controls positions in SLW.

Original post by Brent Archer

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