I was long silver for most of 2024, made money both ways through hedged equity (SLV) and various options. I closed by position at $28.50 for a profit, and rode OTM puts to the current 20 day low.
I didn't want to buy at the bottom of the channel because of the overhead resistance where silver futures are now testing. I see a trade setup for a sellside liquidity run (stop sell run) back to around the 25% of the 20 day trading range near support where bullish orderblocks are visible at higher timeframes.
I plan to enter OTM puts 30-60 days out at a strike around approximately 25% the current 20 day range and cover them by buying the underlying (SLV) when they are ITM. The trade setup has a 3:1 risk/reward, but if I can multi-leg enter into a synthetic call I am likely to have little or no risk on the trade, assuming it sets up as I have outlined.
I didn't want to buy at the bottom of the channel because of the overhead resistance where silver futures are now testing. I see a trade setup for a sellside liquidity run (stop sell run) back to around the 25% of the 20 day trading range near support where bullish orderblocks are visible at higher timeframes.
I plan to enter OTM puts 30-60 days out at a strike around approximately 25% the current 20 day range and cover them by buying the underlying (SLV) when they are ITM. The trade setup has a 3:1 risk/reward, but if I can multi-leg enter into a synthetic call I am likely to have little or no risk on the trade, assuming it sets up as I have outlined.
Note
Not sure if this is visible, but this is how the trade could unfold.At 5 contracts on Feb 21, initial risk of $337.50 at current market price. If I am able to pick up 500 shares at 26.47 total risk is $72.50 with unlimited upside and a delta of 304.
optionstrat.com/wHQN8ebF9QVH
Note
Also note, I'm trading options on SLV, but using the microsilver contract for my analysis as it is much clearer. Trade active
So I did take this trade eventually though I initially failed at the multi leg entry (which I usually do, I think I'm just going to stop trying it). Silver spent a lot of time mitigating the trapped sellers and went much higher than I thought, however on this most recent break below 30.10 (SIL!), I went long March 21 27 synthetic calls.I believe a breach into the upper 31.80 - 32 range is imminent.
Note
I've reversed into a short synthetic future after the break of the upper liquidity range I noted, I suspect a sellside liquidity run is nigh. The position is now net riskless and delta negative.Note
I closed that synthetic short after reviewing my decision engine. While a buyside liquidity run has occurred and things are extended, there is no clear evidence of selling activity and thus I have to hold. Rules be rules.
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So I'm seeing conflicting signals, I don't have an explicit sell signal but we are sitting at resistance and the potential for a sellside liquidity run is there. I opted to roll a put to 28, I'm still holding the 27 so I'm effectively in a straddle which is FWM at this point.Note
Closed out the initial 27 put having rolled up to 28. Overall risk on position has been reduced by realizing a small loss, silver looks like it wants to run.Note
I wrote a short synthetic future and bought an ITM 27 call, then sold my underlying shares for a profit. This reverses me into a negative delta position, risk is minimal, a sellside liquidity run is reasonable and I've got plenty of time for it, I'll have plenty of options assuming one does occur.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.