Profiting from Precious Metals Seasonality QE3, Euro Zone Debt with SLV Options.

SLV - Jan21 2012 Call – 40.00 strike @ 5.75
Fridays open Interest for these calls was 70,350 with volume at 6,838
High - 5.75
Low – 4.75
Delta - 0.613
Gamma – 0.035
Implied Volatility – 45.26%
Break-even - $45.70
While this is a high premium bet on $45.70+ SLV before January 22nd, we may open higher and close higher today than when I thought of recommending the call. I part, for this reason, I like the Jan19 2013 -50 strike LEAPS currently @ Bid: $5.55 and Ask: $5.90, leaving much more room for error and I find the time value to currently be under-priced in relation to my price projections.
So if you miss the short term action, SLV LEAPS can provide a big buffer of safety during large scale market declines, as we have seen firsthand in the last month. They also can be a wonderful speculative play in the medium term. Risk capital required.
Disclosure: The author has long positions in SLV options Oct 22 2011 - Jan 19 2013.
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