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TFC Commodity Trading Forum

Lee - Silver position in the 18 puts

Hi Coral,
Thanks, I hear you but want to fully understand this stuff.
- I do not think the details of what is happening here will be found in any book.

I think what is/may happen with the Si market presents a unique opportunity to gain some insight in real time.

USC: I see nothing unique happening in silver out side of fundamentals and tech's battling it out as the chart shows the movement of silver. Either it moves up, down or side ways that is it in a but shell.

I have a total of $230/275 in this, without/with comm.

I don't care if I lose it.

USC: Wrong altitude as a trader but is your money. Maybe a re hash of money management and risk control is needed ?

The premise here is/was that Si had a parabolic rise and it would experience a parabolic fall within the time frame of the options.

USC: Maybe and maybe not, technical's do not work every time like anything else in this business there are no absolutes....

Waiting TOO long to buy the puts would make them correspondingly more expensive as Si falls as "expected". So I decided to stick my toe in the water

USC: I see the problem as buying to far OTM, that is why so many lose trading options, trying to buy them cheap and then wishing on a wing and a prayer that they will get ITM before expiration and they don't. How is the water right now, kinda cold I would think.

Clearly, I bought the 18P's too early

USC: Not to early just to far out. .

Right now, I'm ahead $50 on the lot, deducting comm. I'm even and I'm pretty sure there is another comm. on the sell transaction.

So, with 46 days left, 16 before getting into the last 30 days, I assume Si will decline further. It may decline dramatically, It may not.

USC: I understand your thinking and it may just happen, so let us pray right :) Yes a nice drop in sliver would increase the value of the puts. but if that happens I suggest you bail because a correction may occur and the as the volatility comes back in on the correction the puts will drop in value quickly and you will lose any pumped up prem on the drop plus time value working against you..

I think your original comment was look at selling a Put one strike below for each put that I bought, and letting them all expire worthless. I will price that out, and correct me if wrong on this before I go through the work.

USC: Well it was a thought, something to consider. But I also mentioned to compare what you can now sell it back for and the loss to putting on the put bear spread collecting prem and let it run it's course to expiration and how much prem you can collect and the loss then at expiration.

Keep in mind, this is an "educational exercise" not trading advice !! The only way I will ever understand this stuff is by "doing" and I'm willing to spend $275 to accomplish that !!

USC: First I think in order to educate yourself you should buy the book by David Caplan if your looking for education. for about $20. , cheaper than $275 :) Preservation of trading capital is top priority.

Happy trading Lee.

USCoralSea