Another Hot Trade Idea In Precious Metals
Over the last couple weeks, I’ve highlighted both GLD and GDX as trade ideas.
Today I’m going to focus your attention on the other metal that’s also ready to move.
In fact, it’s already started to move, and there’s an exciting opportunity in the options.
Read below for another hot trade in the metals.
As you can see by the weekly chart in the Silver ETF (SLV), it just traded over an important swing high of $14.50.
I’m showing the weekly chart so you can see the big picture pattern of the break over the faster moving average which is the 50-week (or 200-day), then a two week pull back to the average before its current new swing high.
That sequence is very bullish.
You can also see that SLV isn’t a very volatile ETF on an absolute basis.
It would be a big move if it moved to $15.50 to $16 level.
As a result, this may not seem like an interesting trade opportunity, however, the October 15/16 call spread is trading for about 23 cents.
Based on the current setup – the breakout over $14.50 with a very reasonable target of $16, this call spread could get to its max potential of $1.
By using a call spread it means any move over 15.25 is profitable.
With GLD, GDX and SLV all moving, I’d like to be long SLV as long as it’s over $14.00.
The October 15/16 call spread is an opportunity to double your money with a very reasonable move to $15.50, or earn a 400% return if SLV is trading over 16 at the end of October.
Rick Nartarian, Chief Investment Officer
The American Investor Daily