About 3 months ago, I bought contracts in iShares Silver Trust (SLV) ETF kind of as an experiment or litmus test to see my hunches are correct.
If the stock market and economy falters in the next 3 months by January 2010 SLV contracts with a strike price of $19 will make some money as long as the contract price exceeds my break even of $2.10. Currently the contract price is at $2.23 (Sept.16, 2010).
The price of silver as been suppressed for quite some time below $19, it broke that about 3 months ago, and now it is breaking over $20. With gold prices at all time highs, silver seems like an attractive alternative and more people I guess are running to silver in case the economic situation declines.
My January 2010 SLV contracts with a strike price of $19, expires in the 3rd week of January 2010, so I will need to get out before then and given the fact that as it gets closer to expiry date the value of the option contracts decays at a rapid rate…I will need to dump these contracts by end of October and hopefully at a profit. This means that iShares Silver Trust (SLV) ETF need to stay above $19.
Let’s see how the market does in the next 1.5 months.
by Das Brain
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