We hold 300 shares with a 42.01 basis against three June 40 puts acquired for 2.35. SLW has retreated in the face of implacable supply near 44, but bulls will have a chance to turn things around today from 40.17 or higher. That’s the midpoint support of the corrective pattern shown, but if it were to fail on a closing basis for two consecutive days, I’d infer more downside is possible over the near term to as low as 36.35. That would represent a correction of nearly 24 percent. Alternatively, bulls would have to hit 44.52 by tomorrow to regain the offensive. _______ UPDATE (April 26, 6:52 p.m.): The 40.17 midpoint has now become resistance, and if it should go unchallenged today, expect the stock to continue lower to the 36.35 target. Accordingly, I’ll recommend offering four (one would be naked, assuming your account allows it) May 37 puts short if and when the target is closely approached (i.e., within 10-15 cents), good-till-canceled.
