Play Silver Volatility With SLV Bull Spread

IVolatility is a leading provider of options data, analysis tools and best-in-class volatility charts. The move upward by gold futures last week suggests a technical case can be made that the active pattern is a complex Head & Shoulders Top with the head at the December 7 high of 1434.10, basis the April Futures contract. Options trading investors should consider a bull call spread in iShares Silver Trust (NYSE: SLV ). Silver is giving a different picture as it reversed upward after a minor correction and resumed moving higher, closing above the January 3 high of 31.275. Now at 32.30, basis the active March Futures contract, it negated the Head & Shoulder Top pattern. SLV closed on Friday at 31.79. Last Thursday’s close above the January 3 high of 30.44, cancelled the previous SLV Head & Shoulders Top pattern. However, there is now a divergence since gold still remains in a potential Head & Shoulders Top pattern and copper did not exhibit the same strength last Thursday and Friday. Silver is breaking out, a divergence from gold, sending mixed signals. The divergence with gold is a concern, but if we are going to trade what we see and not what we think, we should go with it. The current Historical Volatility is 31.25 with an Implied Volatility Index Mean of 35.40 for an IV/HV ratio of 1.13 and a bullish put-call ratio of .35. Consider this bull call spread. B/S Qty O/C USym Exp Strike P/C Price IV B 1 O SLV Apr 32 Call 1.65 35.10 S 1 O SLV Apr 32 Call .71 37.33 Dr .94 All prices are as of Friday Feb. 18. Check today’s option chains for current pricing. Due to the divergence with gold we suggest limiting the trade size as a risk control measure and setting the SU (stop/unwind) at a close below the January 3 high of 30.44 the previous head of the negated Head & Shoulders Top. Follow us on twitter for more ideas from our scanners and other developments. Visit IVolatility for more trading ideas and volatility charts.
Negocioenlinea
tdp2664
gol2664
InvestorPlace