3/20/2013
There is a very nice setup occurring in the Silver ETF ($SLV), it has formed a nice bearish triangle pattern, which usually happens after a big down move. I am looking for Silver to break down hard out of this triangle after the Fed Meeting. So the best way to play this, the way that Billionaires play this, is to use super juiced deep in the money put options. (Please see previous blog post where I explain what this means)
Why am I picking Silver here to short, first The Fed meeting always moves the Silver and Gold Markets, secondly Silver puts are extremely cheap, because ($SLV) or the Silver ETF has traded flat for the last month
Here are the Options I like, I like the April $29 Strike Put Options for $1.25, this option expires on April 4th. This literally lets you profit almost 1 for 1 with the Siver ETF, meaning the current price of the Silver ETF is $27.88, and this put option would be in the money at $27.75, only $.13 cents below the actual price of the Silver ETF, so basically you are getting a super leveraged way to short the Silver ETF.
If ($SLV) the Silver ETF breaks below the $27.60 level than it will go to $26.50 the next support level by this thursday or friday. That would give you a 100% return on your put option because you are paying a $1.25 for the put or $125 dollars and you would make $1.25 or $125 dollars on the put option if you take your profit at the $26.50 level. Not a bad return for one or two days work
Will Meade
Editor of the Billionaires Portfolio
wmeade@purealpharesearch.com