Options Trade - iShares Silver Trust (SLV)
Wednesday August 08, 2012

iShares Silver Trust successfully established a double-bottom!

**OPTION TRADE: Buy the SLV Nov 2012 30.000 call (SLV121117C00030000) at or under $0.70, good for the day. Place a protective stop limit at $0.20 and a pre-determined sell at $1.50.

by Ian Harvey

August 08, 2012


Although silver is traded as a commodity, it is also a form of money. You only have to go back less than a hundred years in the long span of human history to discover that silver once circulated widely as currency, typically in the form of silver coins.

In fact, the UK's paper currency the Pound Sterling originally obtained its name from the British currency that once represented the value of one pound of sterling silver, which is a mixed metal that consists of more than 92.5 percent pure silver.

Furthermore, as you look closely at the supply and demand profile for silver, the issue of its monetary status seems increasingly important.

iShares Silver Trust (NYSE: SLV) investment reflects the price of silver owned by the trust, less the trust’s expenses and liabilities. The fund constitutes a simple and cost-effective means of owning silver since the trust holds physical silver bullion.

For two months, silver has been consolidating, but on July 13, it successfully attacked its 50-day moving average, gapping through it and therefore successfully establishing a double-bottom with a new target of $46.

The global slowdown has curtailed excitement in the metal, while stocks outperformed throughout the "end of the world" trade, which bonds have been signaling. Notice that the ratio is sitting around what could be an important support level in the silver to stock relationship, and that a potential uptrend of leadership may now be forming.

The catalyst for such a move might be forced reflation, which we will learn of this week one way or another. Inflation expectations appear to be on the verge of a comeback. This in turn might make silver and other cyclical trades outperform in the next leg higher.

The implication here is that metals might soon recover, and silver in particular, and strengthen once again.
Therefore, based on the facts above the following options trade is recommended…..

**OPTION TRADE: Buy the SLV Nov 2012 30.000 call (SLV121117C00030000) at or under $0.70, good for the day. Place a protective stop limit at $0.20 and a pre-determined sell at $1.50.

”Success is simple. Do what's right, the right way, at the right time.”

Option Tip for your Success!
Options traders are not successful because they win.
Options traders win because they are successful.

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