Buy Alert: November 13, 2015

Buy Alert: November 13, 2015

 

Option Strategy:

Buy iShares Silver Trust $SLV December 18, 2015 $14.00 calls for $0.33 or better.

 

Commodity Outlook: Silver

Without question, the price of silver has seen an abrupt downturn the past two weeks.  Wary investors are pricing in the growing likelihood of a December interest rate raise by the Federal Reserve.

Fear of rising rates has silver trading near very important technical support at $14 an ounce.

While I’m not bullish on the metal from a fundamental standpoint right now, there are good odds of a substantial technical bounce off the $14 area.

Here’s how we capitalize on potential short-term upside in silver…

 

Resource Trade: iShares Silver Trust $SLV

By now most of you likely recognize this silver tracking ETF…

$SLV rises and falls in lockstep with the price of silver.  What’s more, the ETF has a very liquid options chain, which makes it great for speculating on silver market moves.

With silver sitting at technical support, the best tactic is to buy inexpensive, low-risk calls.

So here’s what we’ll do…

Buy the $SLV December 18, 2015 $14.00 calls for $0.33 or better.

The current bid/ask spread for this contract is $0.27/$0.29.

Do not pay more than $0.33!

Our official entry price for performance tracking is $0.29.  Your price may be higher or lower.

Exit Strategy:

Remember, we want $SLV to trade higher.  Our first profit target is $14.25 while our second target is at $14.75.

Our risk control line is just below the yearly low at $13.25.  If $SLV trades below that level, conservative investors should consider closing this trade to preserve capital.

 

Category: Commodity Trading