Trade Alert - (SLV) May 20, 2024 - TAKE PROFITS - SELL
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) – TAKE PROFITS
SELL the iShares Silver Trust (SLV) June 2024 $21-$23 vertical BULL CALL debit spread at $1.98 or best
Closing Trade
5-20-2024
expiration date: June 21, 2024
Portfolio weighting: 10%
Number of Contracts = 50 contracts
Since I added this contract seven trading days ago, Silver (SLV) has risen a ballistic 20%. Metals producers are unable to rush supplies to the market fast enough to cover their shorts in the futures market, creating a massive short squeeze. These are conditions that most silver investors only dream about.
Long may it continue.
As a result, we have captured 90% of the maximum potential profit. The risk/reward of continuing on for another month for two more cents is no longer favorable. I want to raise cash so I can dive back in on the next silver selloff.
The recent data indicates that the economy is modestly weakening, hiring is slowing, and inflation is moderating. That has caused interest rates to fall and bond prices to rise, as I expected. That also invites a weaker US dollar and stronger foreign currencies, gold, and silver.
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 EVs. 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.
Therefore, I am selling the iShares Silver Trust (SLV) June 2024 $21-$23 vertical BULL CALL debit spread at $1.98 or best.
As a result, you get to take home $900 or 16.00% in 7 trading days. Well done, and on to the next trade.
This was a bet that the (SLV) would not fall below $23.00 by the June 21 option expiration in 24 trading days.
Here are the specific trades you need to exit this position:
Sell 50 June 2024 (SLV) $21 calls at………….….............……$6.00
Buy to cover short 50 June 2024 (SLV) $23 calls at…………$4.02
Net Proceeds:…………….…….………..………….…....................$1.98
Profit: $1.98 - $1.80 = $0.18
(50 X 100 X $0.18) = $900 or 16.00% in 7 trading days.
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.
