iShares Silver

We were in and out of May 41 puts yesterday, dropping about $50 on four of them as we tested the water.  A chart of the puts suggests much lower prices ahead (see inset), which if true means that the underlying vehicle is headed significantly higher. SLV's  daily chart confirms that our 42.60 target "should have" shown some stopping power, and the fact that it did not tends to corroborate the grim prognosis for "don't" bettors foolish enough to acquire puts.  Now, a Hidden Pivot resistance at 43.32 is the first place where we might expect to see some stopping power.  You can try shorting there via four May 42 puts, but once again I'll suggest using a very tight stop-loss 8 to 10 cents below what you pay for the options.

Yesterday's whacky action saw SLV spike to within a dime of our short offer.  I'd given a rally target at 42.68, but re-measuring the pattern has refined it to 42.60.  There are too many variables to provide a "safe" entry strategy Monday night for Tuesday, but I'll provide a speculative one nonetheless for anyone feeling bold:  Bid 1.26 four four May 41 puts, stop 1.12.

The rally pattern shown in the chart suggests a stumble at or very near 42.68.  Let's try to get short there, buying four May 41 puts if and when the underlying vehicle gets within 5-8 cents of the target.  If the stock tops where expected and comes down hard enough to allow you to sell the puts for 40 cents more than you've paid, close out two of them. Since there's a chance that the stock will hit 43.32 if it blows past the first pivot, plan on buying four additional puts at that level. _______ UPDATE (11:35 a.m. EDT): A rally spike in the opening minutes of the session carried to 42.50 -- not quite high enough to get us short.  The order is still valid, but, for your information, there was no easy way, even drilling down to the two-minute chart in search of camouflage, to get  short.

There's a midpoint support at ____ that we can bottom-fish with a _____ bid for 200 shares, stop ____. If the stop is hit, look for the selling to continue to ____. If the stock gets within three cents of that price, buy four August 12 calls (SLVHL), good through Monday.  If you want to park a limit order with your broker, a price of _____ for the calls would be a decent buy. I've included a snapshot of an option calculator that shows how I estimated fair value for the August 12s with the underlying shares trading around _____.