Market Curiosity: Exploring Markets And Systems

February 11, 2011

SLW – long short term and long term calls -4%, +60%, +65%, -15% +53% (part 1)

Filed under: +51 to +75%, -0 to -4%, -05 to -24%, Long Calls, Mistakes — Tags: , — Jeff Fitzmyers @ 7:49 am

Long March 36 calls at 1.53, and June 60 calls at 0.25.

I had a dream this morning that I was flying from Hawaii. I arrived in time but there were a lot of number on my pre boarding ticket, and it seemed none of them were being called. Not a big deal, I did make it to the counter and got a ticket and started scampering to the plane. I was not rushing — what’s the worst that can happen? Stay another day in Hawaii? But I was scampering.

Translation: While you are overtrading, the plane is taking off. True.

Silver
+ Instead of price dropping, it seems to have been waiting for the ema’s to catch up.
+ EMA’s all pointing up.
+ Price rose past the 3 peaks to the left easily. If I have it correctly, Rick Ackerman says that is bullish.
– The monthly CCI is pointed down. Not ideal — was the correction enough?
+ Fundamentally, silver is crazy bullish.

SLW
+ Price nestled into the ema’s.
– Overall, I would prefer SLW leading silver. But what do I know.
+ Fundamentally, SLW is even more crazy bullish than silver (If silver does not go down much over the next few months).

Feb 14: Not to be overtrading or anything, but buying Mar calls was a mistake. In the bustle to open the positions, I was not centered and thought March was further away (Isn’t it still January?!?!?). Anyway, sold the March calls -4% and bought June 36 calls at 3.66. I feel much better now. The position is bigger than the normal size and it is much better to make it right, than stress about the timing. “The first loss is the best loss”.

Feb 19: Sold the June 36 calls for 5.90 ish +60% because they were $3 in the money. Bought June 39 calls at about 4.41. I did this to increase the number of options. If price really is explosive, more options are better than fewer. But the options are quite expensive right now so I picked an at-the-money strike. The June 60 calls purchased at about 0.28 are trading for 0.56. (I foolishly exited these at break even of 0.22 and bought back in.) I also bought a few highly speculative silver July 60 calls at 0.042.

A number of things were done correctly: Much more than one position is being traded. So on the rollover 10% of the ~:windfall” profit was removed from the account. The rollover also happened after 11:00 PCT when prices tend to rest.

Rick Ackerman is suggesting a target of 45.01. Chart

Update of Why I prefer SLW to CDE, HL, PAAS, SSRI and silver:

Xiphos Trading “FWIW talked to my bro-in-law at GS today, said they covered half their short vega (VOL) last week. Meltup has trading desk alarmed.”

References
+ Silver backwardation growing even as price rises: speculative targets based on 2008 LBMA backwardation

Feb 21: SLW might open quite high tomorrow. Time to sell and buy back betting the gap will close? I don’t know. I was going to write out a few thoughts I had on this, but it’s time for bed. I will likely do nothing unless SLW really starts dropping. This is not the time to over trade or get cute. Many eyes might now be focusing on silver and the silver stocks. There are only a handful and SLW might open around 43 drop for 15 minutes to close the gap at the December high of 32.34 then be at 45 2 minutes later. All with high volatility which might mean large enough spreads such that it would be challenging to even profit on a 2% drop. Plus the stress of it all.

Just like Feb 19th, if it’s time to roll contracts up a few strikes, I will do it later in the trading day.

Feb 23: Yesterday I did sell half the in the money calls and bought June 43 calls for 3.86. Thoughts were thus:
+ Because silver price “should” keep going up for at least 20% over the next 2 weeks, I want to keep the position.
+ But it would be nice to sell the big gap up unless it takes off to the upside.
+ So I sold half the position as prices was declining and bought the 43 calls.
+ Although I could have waited and bought much lower toward the end of the day, the object was only to roll forward half the contracts and hopefully make back the spread, which happened 🙂
+ If there was a down draft I would wait until that was over. But I would buy at the end of the day almost for sure so that I kept the position.

SLW has had much, much more volume compared to it’s past and compared to any other major silver stock. Since price is going up, that seems quite bullish. SLW’s price relative strength the past 5 days:

Feb 24: Rolled the other half of June 39 calls to June 43 call during the morning weakness. +70%. (Average of whole position = +65%)
– Gold has been up 7 days in a row.
– Silver and SLW are way above the 10 EMA. On the break down below 39.65 all June 34 calls were sold -15%.
– If price closes below yesterdays low, that could mean dropping probably tomorrow too.
– There is also the unfilled gap around 37.

– Silver broke out to 30 year new highs and is could back test.

The June 60 calls have only been added to in dribs and drabs.

The intention is to buy when SLW calls again when when price gets to 36-37, or rises above today’s high.

Feb 25: I am changing my mind. Possibly buy calls the morning weakness? Silver bounced hard from it’s backtest of the 10 ema. Hmm… Ideally, it would be nice to see SLW leading silver stocks, and silver leading gold. And if SLW is very strong, the gaps don’t need to be filled.

Feb 26: Long June 43 calls at 3.25. So far I am pleased with this trade. Price could have opened down and kept going for $2. Part of the reason the calls were entered was the strength of the magenta CCI. It suggested that price would have follow through even if timing is off. And the yellow CCI was turing up again. And the longer term blue CCI looked to be bottoming.

Which is nice because price did turn right down 🙂

It would have be best if price closed above yesterday’s high, but this might be good enough.

Time to post the 5 day comparison chart again: SLW is almost double everything else.

March 2: I will put in the numbers tomorrow. Raymond Merriman’s silver index is suggesting a +2% reversal. I am not sure, but I think that about 10% of the time it turns out to be an acceleration. If a reversal, might have to take action. SLW’s earnings are tomorrow which makes things interesting.

March 3: Sold June 43 calls for 4.99 +53%. Bought June 45 calls for 4.35. This is the end of part 1. the June 45, June 60, and July silver 60 calls, will be followed on: SLW – Part 2 of the silver campaign

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