Sunday, September 19, 2010 at 11:43PM
The silver bulls and the silver bears continue to lock horns in a tussle for supremacy, a tussle that will never end so we need to learn to live it. This week especially will put that this tussle into sharp focus with every new tranche of contracts being analyzed for clues as to who holds the upper hand.
As we write Sydney and now Hong Kong have opened in a positive mood with gold prices up around $4.00/oz and silver prices up around $0.08/oz, so a nice start to the week, especially if this air of anticipation rolls through to the UK market later on.
We see it as knife edge stuff and both the bulls and the bears refuse to even blink as though all rests on the next turn of a card. That card could be an event which gets parlayed into something big or a news item which acquires legs and then runs and runs. Either way, when silver prices move, the move has every possibility of being exaggerated as those on the other side of the trade scramble to cover their positions.
Our stance remains firm as we expect the bears to blink first as silver makes steady upward progress and they decide to cover their short positions, which means a spot of buying for them, pushing silver prices even higher. Of course we could be wrong in our assessments and things could move quickly the other way with the bulls having to close their long positions. For those who hold the metal itself and the associated stocks for the long term, the weekly gyrations are of little consequence. However, for the short term and options traders among us these gyrations can have a dramatic effect on the value of an options contract. Throw in some time decay and it makes for someone having an edgy day in the work place.
Taking a quick look at the above chart we can see that silver prices have put in a 'sterling' performance of late with resistance anticipated at around $21.50 so we are looking for a penetration of this resistance level and hopefully silver prices can establish themselves for a few days or more above this resistance. If silver can then hold, a move towards the $23.00/oz level could follow swiftly shaking out the weaker shorts and setting the stage for a swipe at $25.00/oz.
We can also see that the technical indicators are at the top end of the respective ranges and we would prefer to be coming off much lower levels, however, the fundamentals are strong so we expect them to rule the day.
Over in our options trading den the team have updated the chart to show all the closed trades as of today, so you can see exactly how it is going, please click this link.
Stay on your toes and have a good one.
Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.
On Friday, 27th August 2010, we closed another successful trade banking a profit of 79.46% on Call Options on Silver Wheaton.
The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:
On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09. On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days, with more positions opened yesterday. Drop by and take a look.
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