When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline.
Trade Alert - (SLV) – STOP LOSS
SELL the iShares Silver Trust (SLV) August 2024 $23-$25 vertical BULL CALL debit spread at $1.68 or best
Closing Trade – NOT FOR NEW SUBSCRIBERS
7-30-2024
expiration date: August 16, 2024
Portfolio weighting: 10%
Number of Contracts = 55 contracts
Silver has clearly lost its short-term upside momentum. More concerning is that it failed to substantially bounce off of our near $25 strike price. I am therefore stopping out with a minimal loss.
Blame the Chinese.
I am up so far this year, +33.47%, that my tolerance for losses is about zilch. We have major profits to protect. So, even though the iShares Silver Trust (SLV) only briefly touched the $24 handle, my patience in waiting for a substantial bounce is about nil. The short-term momentum for the precious metals is taking a break and I’d rather play it on the way up than on the way down.
Even though we have only 13 days left until the August 16 options expiration, the risk/reward of continuing with this position is no longer favorable.
Therefore, I am selling the iShares Silver Trust (SLV) August 2024 $23-$25 vertical BULL CALL debit spread at $1.68 or best.
DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
Simply enter your limit order, wait five minutes, and if you don’t get done cancel your original order and lower your offer by 5 cents with a second order.
My long-term target for (SLV) is $50, up from today’s $25.30.
The bull case for silver is simple. The electrification of the grid means that industrial demand for the white metal is about to soar. Silver is used in the national grid, solar panels, and EV’s. It also has many applications in electronics.
In the meantime, silver production has been almost level at 26,000 tonnes a year for the last decade. In 2023, only 23,000 tonnes were produced globally, setting up a potential short squeeze. The charts show that after a one-month rest, silver is ready to take off again.
The iShares Silver Trust (SLV) is a play on physical silver.
Silver is an investment much like other precious metals. It has been regarded as a form of money and a store of value for more than 4,000 years. You can find silver relics of the Pharos used in Egypt’s National Museum at the foot of the Great Pyramid.
Silver lost its role as a legal tender in developed countries when the use of the silver standard came to an end in 1935. Some countries still mint silver coins and collector coins, such as the American Silver Eagle with nominal face values. The main demand for silver was for industrial applications (40%), jewelry, bullion, and ETFs. Global silver reserves amounted to 610,000 metric tonnes at the end of 2023.
The (SLV) is part of the Blackrock family of ETFs, with $10.6 billion in assets under management, and an expense ratio of 0.50%. It is priced off of the open market for silver bullion traded on the LBMA, or the London Bullion Metals Exchange. The silver is held in the exchange vaults in London. The world’s largest banks are the market makers in the LBMA, including:
Citibank N A.
Goldman Sachs International.
HSBC Bank Plc.
JP Morgan Chase Bank.
UBS AG.
Morgan Stanley & Co International Plc.
The LBMA headquarters are next door to the Bank of England and down the street from my old office at Morgan Stanley in the City of London. LMBA holds 25,612 metric tonnes of silver, valued at $20.2 billion, which equates to approximately 823,451 silver bars. For more information about the LBMA please click here to visit their website.
For details about the actual holdings of The iShares Silver Trust, please click here to visit their website.
This was a bet that the (SLV) would not fall below $25.00 by the August 16 option expiration in 12 trading days.
Here are the specific trades you need to close out this position:
Sell 55 August 2024 (SLV) $23 calls at………….…….....…$2.64
Buy to cover short 55 August 2024 (SLV) $25 calls at….$0.96
Net Proceeds:……………………………..………….…..............$1.68
Loss: $1.80 - $1.68 = -$0.12
(55 X 100 X -$0.12) = -$660
If you are uncertain about how to execute an options spread, please watch my training video by clicking here.
The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep-in-the-money spread trades can be enormous.
Don’t execute the legs individually or you will end up losing much of your profit. Spread pricing can be very volatile on expiration months farther out.
Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.
