SLV Straddled Here

Discussion in 'Options' started by shortie, May 4, 2011.

  1. SLV implied volatility is ~50 right now. i have very rudimentary knowledge about options, my intuition tells me that to sell SLV volatility now could be easy money. but what's the best way of doing this?

    i am thinking of writing straddles at various prices levels as SLV is moving around in the coming months.

    is May 20 2011 too close?

    if i write straddles every 5% move in SLV is this a good strategy (e.g. SLV $40 i write $40 straddle, SLV moves to 42 i write $42 straddle, etc.)?

    i will be purchasing Wings to protect myself if SLV decides to really go nuts. but let's focus this thread on straddle construction first assuming that the black swans are taken care of.
  2. The best move to cover for black swans and take advantage of high IV is to sell Iron Condors for a credit. Something like:

    • SLV at 40.58
    • Sell 41.00 call
    • Buy 44.00 call
    • Sell 40.00 put
    • Buy 37.00 put

    EDIT: Also checkout AGQ
  3. may atm 40 straddle is ~$4. slv moved that much in a day. short slv straddle is suicide.

    i am long 40P calendar and 44C fly (opened when slv was around 42), will look to close the calendar tomorrow morning, cant get a connection on my stupid iphone when it touched 40 today.
  4. IB bulletin:

    Margin Increase: Silver Derivatives

    In light of the recent unprecedented volatility in silver markets, the exchanges that offer trading in silver derivative contracts are increasing the margin requirements on these products. In an effort to adequately address the inherent risk resulting from this volatility, we are increasing margin requirements on silver derivative contracts to a level exceeding that which the exchanges are implementing.
  5. AGQ is like krak
  6. would it be better to Buy June/July options while selling May?
  7. SLV is one sick bugger, -6% today.
  8. mikeenday

    mikeenday Guest

    time to go all in now?

  9. newwurldmn


    A stock that has moved 6% today, will probably move 6% tomorrow and the day after. Why sell any kind of option?
  10. you go first :) .

    maybe small size?

    because eventually it will stop moving like crazy
    #10     May 4, 2011