DailyPlay – Opening Trade (SLV) – February 15, 2023

SLV Bullish Opening Trade Signal

View SLV Trade

Strategy Details

Strategy: Cash Secured Put

Direction: Bullish

Details: Sell to Open 1 Contract Mar 17th $20 Cash Secured Put @ $0.55 Credit per contract.

Total Risk: This trade has a max risk of $1,945 (1 Contract x $1945).

Counter Trend Signal: This ETF is currently neutral to bearish and is expected to resume an uptrend.

1M/6M Trends:  Bearish/Neutral

Technical Score: 6/10

OptionsPlay Score: N/A

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that whenever there is a multi-leg option strategy, it should be entered as a single trade. 

Please note that these prices are based on Tuesday’s closing prices. Should the underlying move significantly during the pre-market hours, we will likely adjust the strikes and prices to reflect a more accurate trade entry. 

Investment Rationale

There was a ton of movement in the markets after the CPI number came out, but when all was said at the end of the day, we saw the SPX virtually flat on the day – not particularly helping us get a better clue on whether or not the bulls can push this up and through the key 4148 level by Friday’s close. What is still evident, though, is that this bullish weekly Propulsion Momentum level has not yet been properly breached, and as such, I will stay with my near-term call for a market pullback from this mid-4100 area.

Recall last week my desire to buy the iShares Silver Trust if it sold down to the uptrend line and cloud bottom area I had highlighted. Well, it got there yesterday while also marking a daily Setup -9 count – upping the odds that the timing is right to be bullish now, too.

SLV – Daily

As such, let’s look to put on a bullish play by either A) selling a single March 17th $20 cash-secured put. It closed at $0.545 mid-yesterday and gives you the chance to collect the premium if not exercised, or lets you get long SLV closer to $19.45 if exercised, or B) simply buying the SLV for the approximate $2000 that 100 shares would cost you.

Choice A makes you have the $2000 cash in your account, and you run the risk that silver sharply rallies and you’re not involved (other than collecting the ~$545).  In this case, you’re also covered down to $19.45 before you lose money.

Choice B makes you lay out the ~$2000 right away, and you either make or lose – penny for penny – what silver makes or loses. But it does gives you unlimited profit potential if silver materially rallies, whereas Choice A maxes out your return at ~$545.