Think about shopping for a put possibility on December silver (SIZ25) futures.
See on the each day bar chart for December silver futures that costs have soared to a report excessive this week. Nonetheless, it’s my bias that costs are near a near-term high. Historical past over the previous 50 years reveals that if costs are near or above $50, they don’t keep there for lengthy. Additionally, see on the backside of the chart that the Relative Energy Index (RSI) is exhibiting bearish divergence, whereby silver costs moved to new for-the-move highs, whereas the RSI began to pattern down from its late-September peak.
Essentially, safe-haven demand has been driving silver costs up, together with the closure of the U.S. authorities and U.S.-China tensions. Nonetheless, the U.S. authorities has been closed earlier than and can reopen once more. Additionally, tensions within the Center East have eased not too long ago. The U.S.-China commerce tensions are elevated at current, but it surely’s probably each nations will ratchet down their rhetoric in an effort to return to a commerce settlement, understanding {that a} full-blown commerce conflict would harm each economies.
Think about shopping for a well-out-of-the-money put possibility on December silver futures. The volatility is so excessive at current that the less-expensive well-out-of-the-money places can nonetheless be worthwhile. The draw back value goal could be $40.00, or beneath. The December silver choices expire in late November.
IMPORTANT NOTE: I’m not a futures dealer and don’t handle any buying and selling accounts apart from my very own private account. It’s my objective to level out to you potential buying and selling alternatives. Nonetheless, it’s as much as you to: (1) determine when and if you wish to provoke any trades and (2) decide the scale of any trades you could provoke. Any trades I talk about are hypothetical in nature.
Here’s what the Commodity Futures Buying and selling Fee (CFTC) has stated about futures buying and selling (and I agree 100%):
Buying and selling commodity futures and choices just isn’t for everybody. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Earlier than you make investments any cash in futures or choices contracts, it is best to contemplate your monetary expertise, targets and monetary sources, and understand how a lot you possibly can afford to lose above and past your preliminary fee to a dealer. It’s best to perceive commodity futures and choices contracts and your obligations in getting into into these contracts. It’s best to perceive your publicity to danger and different elements of buying and selling by totally reviewing the danger disclosure paperwork your dealer is required to present you.
On the date of publication, Jim Wyckoff didn’t have (both straight or not directly) positions in any of the securities talked about on this article. All info and knowledge on this article is solely for informational functions. This text was initially printed on Barchart.com
