Buy Alert: May 22, 2015

Buy Alert: May 22, 2015

 

Option Strategy:

Buy iShares Silver Trust $SLV July 17, 2015 $16.50 puts for $0.75 or better.

 

Commodity Outlook: Silver

Despite a rally to the $17.75 per ounce level in mid-May, the short-term bullish prospects for silver aren’t that great.

Why?

Thanks to a troubling outlook for the Greek debt debacle, the euro is once again turning sharply lower.  As a result, the US Dollar looks ready to make another strong run higher.

In fact, there’s a good chance the US Dollar index soars back to the highs set in early March.

That’s bad news for the price of silver.

Here’s a great way to profit from a potential short-term downturn in the metal.

 

Resource Trade: iShares Silver Trust $SLV

As you know, $SLV trades in lockstep with the price of silver.  When the price of the metal falls, so does $SLV.  That’s why we’re buying a low risk put position in $SLV.

Here’s what we’ll do…

Buy the $SLV July 17, 2015 $16.50 puts for $0.75 or better.

The current bid/ask spread for this contract is $0.65/$0.67.

Do not pay more than $0.75!

Our official entry price for performance tracking is $0.67.  Your price may be higher or lower.

Exit Strategy:

Remember, we want $SLV to trade lower.  Our first profit target is $15.50 while our second target is at $15.00.

Our risk control line for this trade is at $17.00.  If $SLV trades above that level, conservative investors should consider closing this trade to preserve capital.

 

Category: Commodity Trading