It’s been a long time since we last looked at this vehicle, but it’s probably a good time to tune in again, since SIL will offer subscribers a way to trade bullion on-the-cheap using equities and options rather than futures if silver prices are about to take off. However, a more important reason I’ve resumed coverage of this vehicle is that Friday’s rally, although superficially unimpressive, was subtly bullish. Notice that the 30.94 intraday high slightly exceeded a 30.92 ‘internal-ish’ peak recorded on February 26. This is subtle enough ‘camouflage’ that I can recommend using a conventional entry trigger at ‘x’ if and when one occurs. Note that there is no actual point ‘c’ low yet, nor will there be until such time as SIL rallies 22 cents (i.e., 25% of A-B) from whatever low becomes manifest. If you’d prefer to substitute options for stock, I’ll suggest buying the April 20th 31-32 call spread a dozen times for a 0.25 debit. Work this order only with SIL bid 30.30 or higher. If you can buy the spread for 0.20, presumably by legging into it, step up the size of your order to the limit of your comfort zone. ________ UPDATE (March 26, 11:38 p.m.): The call spread closed at 0.41, off a quoted bid/asked of 0.30/0.50. The bet is not a bad one for 0.30, but I’d like odds of at least 4:1, meaning we should pay no more than 0.25. Stay the course for now. If SIL pulls back, we will also consider legging into covered writes. _______ UPDATE (March 27, 10:04 p.m.): The spread closed at 0.25 , but I will wait until I hear from subscribers who bought it for that price before I establish a tracking position. Please let me know in the chat room. Regardless, you can bid 0.15 for the spread four more times, good through Friday. _______ UPDATE (March 28, 10:30 p.m.): No one reported buying the spread for 0.25, but you can continue to work the order @ 0.15 regardless of where the stock (ETF) is trading._______ UPDATE (April 2, 7:52 p.m.): There were numerous fills reported at 0.25, so I’ll use that price for a tracking position of four spreads. For now, offer half of your position to close @ 0.50, good-till canceled. Please report any fills in the chat room. The spread was marked at 0.30 today — a good indication of its actual value. _______ UPDATE (April 9, 6:09 p.m.): The only good thing that could be said of this trade is that we risked so little. Even so, it is likely to be a very long while before we attempt another bullish, directional play in a bullion vehicle using naked call options. For now, kiss the $100 good-bye and file the experience in your trader memory bank. _______ UPDATE (April 11, 11:20 p.m.): An unexpected rally has breathed life into the spread, which is currently trading for around 0.30. Continue to offer half the options for 0.50.
