Volume Spike Investor

We love looking for very unusual options trading to look for flags that might now show up in the trading volume.  Silver Wheaton Corp. (NYSE: SLW) is a name that almost never shows up on a the most active call options list.  But as of 12:45 PM EST this Monday we have seen this silver producer’s option highly active just one day ahead of the earnings report.

The AUG08 $15.00 CALLS have traded more than 2,000 contracts.  But the big kahuna is 22,510 contracts of the SEP08 $15.00 CALLS, which had an open interest of 9,575 contracts before this.  We’ve also seen 2,312 contracts of the SEP08 $17.50 CALLS trade hands.

Since coming public in 2005 this stock is up some 300% or so.  It’s hard to imagine what is being expected out of the norm for earnings, but someone sure seems to be acting like they know something.

20,000 contracts represents 2,000,000 shares on a fully leveraged basis, yet the average daily volume in the stock is only about 3.1 million shares.  So far shares today are down 0.4% at $14.57 and the 52-week trading range is $9.72 to $19.54.

Jon C. Ogg
July 28, 2008