Silver is making a move!

It's starting to look good for silver.
For those of you in SLV or the bullion market, I see some good times ahead. I see clear sailing up to around 14.50 an oz. But expect some resistance there and maybe a temporary pull back. Breaking above 14.50 will signal a major run up so don't miss it.
Here's how and why I'm playing it;
SLW, Sliver Wheaton. Currently $6.72 a share. Their 52 week range is $2.51-$19.54.
I'm not thrilled with their PE ratio at 17.47 but I can tolerate that.
And here's why, SLW is a pure silver play, and while they refer to themselves as a mining company, that's not really what they do. They acquire silver cheaply and sell it at the market price.
SLW has several long term contracts by which they are committed to purchase a mining company's silver output for a fixed cost. Which according to their website, http://www.silverwheaton.com/main/?en&home is $3.90 per ounce with their averaged realized price over $13 an ounce. That's a nice little profit.
What is their risk? That the price of silver will tumble to below 4 bucks an ounce.
We already know that's probably not going to happen.
The interesting thing about silver is that it is not the target of most mining companies. It's a byproduct. Those miners are looking for gold, copper and zinc. Silver just happens to be deposited in the same locations and it is pulled out and sold. Often financing the operation so that their target ores are obtained for free. That's why mining companies are willing to lock themselves into contracts for such a ridiculously low price. They are guaranteeing their continued operation no matter what prices do. They simply don't care about the silver.
But Silver Wheaton does.
So where does all this lead us?
I'm building up a position in SLW, but (now pay attention here), because SLW is announcing 4th quarter results on Feb 19th, I'm hedging.
So what does that mean?
I am buying the shares outright but I'm also buying puts, as insurance for the earnings release. Which could be bad due to the recent price collapse.
I am not concerned about the long term prospects of the company because their business model is so good and I know that silver is here to stay, at least for the foreseeable future. But you never know how the traders will react to news of any type.
Of course the news could be good, in which case I will probably lose a couple bucks on the puts, but, again, it's insurance, not a trade.
I'm buying short expiration, in-the-money puts.
Now if I didn't know what that meant, I wouldn't try it. I would simply wait until they report and then either, buy at a discount if they fall in price or take my lumps and pay up for the shares.
The mining sector has sure taken a beating lately, some of them have been hit 70, 80 even 90%,
but as a trader I view this as a golden opportunity and as you know, I like gold too!

Good luck and Godspeed

JT

Legal disclaimer: This post is for informational purposes only and is solely the opinion of the writer. Nothing in this post should be considered investment advice. Before investing in anything, the reader is encouraged to do his or her own research and consult with a certified financial advisor, which John Tompkins makes no claim to be. John Tompkins and Toro Creek Investments accept no liability for financial losses or damages incurred by the reader because of this post.