Note the chart and how I suggest entering this market. The market has to be a bit lower in order to provide the entry. However, I would suggest selling puts against cash, which is also known as "covered puts". I have recommended this before and it turned out successfully. If you search SLV here at Tradingview you will see my other charts on SLV.
I like to layer the put strikes across the months and the prices I have outlined here.
Selling December 12 puts. Selling February 13 puts. Selling March 14 puts. Selling April 15 puts.
I haven't checked to confirm that all of these options are available, but you get the idea. If you are unfamiliar with options and this is uncomfortable for you, then I suggest reading about it and learning. I'd be happy to teach you.
Either way, this is a long term trade that projects out six months in total. I believe the stop loss is acceptable at roughly a 75% retracement of the current advance from the low near $11 this summer.
Now that we have had a nice selloff after QE infinity was announced, I'm imagining a slow rebuilding process that occurs over the next few months where people essentially forget about silver and gold, but during that time long term buyers will accumulate their positions and the market will be set-up for the next big advance into mid-year next year. I think it could happen no matter who chosen as President of the U.S.A.
Cheers.
Tim 5:11PM EST, Thursday, October 18, 2012
Comments
timwest
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Even though there are no options for PSLV, the entry price of $12 has been good. If options were available, assume you could have received between 2%-4% for those options or 24 cents to 48 cents for an entry closer to $11.76-$11.52 net. That is still a decent return for a few months of no work. That works out to an annualized return of (2 months holding period = 6 per year possible = 6 x 2% or 6 x 4% = 12%-24% returns for providing this insurance. I think that is a healthy rate of return.
timwest
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PSLV (SLV, Silver) reached down to the ENTRY LEVEL on this trade recommendation this morning. I have read as many articles since last Thursday about the sentiment in the silver market and I think this is the time to step in and buy and increase commitments to silver. 10:57AM EST Tuesday, Oct 23, 2012 PSLV 13.04 last