“Everyone Is Afraid Of The Open”

The Redditers are going after silver now.

Kind of wishing I hadn’t opened a new Iron Condor on it on Friday (February expiry). So I’m both short and long, betting it will stay within a range for less than three weeks.

It spiked up against resistance late day, but closed below that point, at $25.33 on the ETF. In order for it to gap through my stop in the morning, it would have to jump about 7% at the open, which would break a seventeen-year high from 2013. As long as it doesn’t do that, there will be huge resistance at ~$27. So I’ll be OK if they don’t bid the price up there before the 19th.

[Afternoon update]

Another story. Note that futures did in fact surge almost seven percent, but the underlying did not. On Thursday, it went from $23.34 to $24.72, with a smaller rise on Friday when it ran into resistance. Futures spiked to $27.79, near a September high, but retreated to $26.96 at the close. They spiked at the open tonight to an August high of $29.27, but then retreated again.

Since the futures have been tracking over two bucks ahead of the underlying, I don’t think it will gap through my stop (which would be worst case, since I don’t know how much money I’ll lose, because it depends on how large the gap is), at least at the open. Whether it can hold out until the 19th, when the spread expires, is another question.

[Update a few minutes later]

It’s also worth noting that, while the jump last week was big, it closed Friday at a price from which it had plunged on January 5th, so it wasn’t necessarily a surprise that it would go back to that level. The question is whether it will break it. It did for the futures this evening, so it may well, but it still has the stronger resistance at ~$27.

[Monday-morning update]

Welp, it did gap through the 2013 high, and I did get stopped out of the trade, but at the stop, so could have been worse.

[Bumped]

Update just before market close]

Dang. If I’d moved my stop up, just a little bit, to that previous seven-year high, I’d still be in the trade, because it retreated when it got there.

8 thoughts on ““Everyone Is Afraid Of The Open””

    1. I think mine still has some silver certificates. As I child I assumed that dollar bills today must be redeemable for the gold in Fort Knox, since everything in America only gets better and gold is better than silver.

      1. When I was a child, I thought as a child and spoke as a child. But when I became an adult I put aside such childish things….. For paper

  1. The gold/silver ratio is the play I’m looking at, and why I’ve been investing in silver for some years now. The ratio has dropped 10 points down to 65 just in the last day.

    If it drops down to 40, I might trade some of my silver for gold for a nice little profit.

  2. Quick point: “Iron Condor” does not, in fact, apply to SN8’s landing, though the glide part was unquestionably culturally condor-theft. Any implication that SN9’s landing will not resemble that of a condor is irresponsibly stupid.

  3. I find the “problem” of “storing thousands of ounces of silver” rather puzzling. 1,000 Troy ounces of silver (83 1/3 pounds) occupies a cube a hair over 6 inches on a side. Looking at random on the Internets (all of them), I found a home fire safe that’s reasonably priced, and has a 13.9 cubic foot volume. That’s enough to easily store 100,000 ounces of silver, or $2.7 million worth at the price point you cite. The safe itself (a Mesa security safe) weighs 655 pounds, and the silver would add 8,333 1/3 pounds – so no one is likely to be able to just cart it away.

    What am I missing?

    1. Not missing a thing. My safe is a lot smaller than yours and still adequate.

      Most of my silver holdings are in a self-directed IRA and require a third-party private depository, and that works well since my favorite dealer also uses the same depository so no shipping. They just move my purchase from one shelf to another.

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