Trade Alert – (SLV) October 22, 2012

As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price.

Trade Alert - (SLV)

Stop Loss Sell the (SLV) December, 2012 $28-$31 Call Spread at $2.20 or best

Closing Trade


expiration date: 12-21-2012

Portfolio weighting: 10%

($10,000/100/$2.20) = 40 Contracts

We are approaching our upper strike, so this is a good place to stop out, especially since markets are in “RISK OFF” mode. The loss on this position is minimal because most of the principal loss was offset by the time decay we earned by holding it for a month. Such is the magic of in-the-money call spreads. They make you look smart, even when you’re stupid. When the markets settle down, we will get back into silver with much lower strikes.

Keep in mind that these are ball park prices at best. The best execution can be had by placing your bid in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these out-of-the-money spread trades can be enormous. Don’t buy the legs individually or you will end up losing much of your profit up front. If you don’t get filled, then just wait for the next Trade Alert. The will be many fish in the sea.

These are the trades you should execute to get out:

Sell 40 December, 2012 (SLV) $28 calls at…………………$3.65
Buy to cover short 40 December, 2012 (SLV) $31 calls.…..$1.45

Net Proceeds:………………………….……………….……..…...$2.20

Loss: $2.40 - $2.20 = $0.20

(40 X 100 X $0.20) = $800, or 0.80% loss for the notional $100,000 portfolio.