SII trade ideas
WPM: Sell OTM puts for 9% p.a.On Friday, June 16, we successfully closed our previous short-put trade on WPM (see previous post below).
Today WPM is showing continued signs of weakness, in an otherwise strong market. It is currently trading towards the lows of its trading range. It could continue to show weakness if the broader market continues its journey upwards. However, in the context of a much anticipated market correction and rather high equity valuations, any market correction should help push safe haven assets (precious metals) upwards.
STRATEGY: Sell WPM 11% OTM puts on the September expiry
RISK: Get exercised at the strike and end up long the asset 13% below current price
REWARD: 9% annualized yield
SELL WPM 09/15/17 $17 PUT = $0.40/SHARE (8.81% annualized)
Depending on your risk appetite, the $18 strike and the Jan 19, 2018 maturity could also be interesting.
LONG precious metals so the WPM1. If the Trump will not pass his tax reform and has more problems inside US (FBI case), a market may correct and at that time, the precious metal may rise.
2. USD is weakening ---> price of precious metal will increase.
Target around 30 USD.
