I was looking at silver futures today and I'm thinking it's possible there are some opportunities on the short side of future's options. My point of view on fundamentals is that I don't think it's going to run a lot either way...but I can't support that here in a post very well since I don't have a lot of research at my finger tips. Technically, the signals aren't stacking up strongly either way as far as I can tell so selling premium might not hurt. The premiums seem to be ok -- not perfect, just ok -- and far enough out in a lower risk zone that it might be worth a look. I'll be keeping an eye on this over the next week and doing a little research to see what I can gin up. So far, as of today, this is what it looks like to me, with strike prices on the x axes. Getting 2-300 for deltas under 10 for a couple months of time decay isn't too bad but I might be wrong. No doubt I'm missing something so I'll take my time.
Postscript 10/20/16...
- Correction: the underlying is not Jan it is SIH7 Mar 29 '17 Fut. The contract month is Jan and the expiration is Dec 27, 2016.
- If one were to be interested in, say, a 15/23 strangle expiring in December, based on what is implied in the charts above, the prem of ~$426 is ok but not over the top wonderful and looking at a weekly chart (continuous front month) it looks like this:
- So, I don't absolutely love it, now that I've looked at it some more, but I could live with it...with good risk management. On the other hand, I already have short puts on near-dated gold futures so I already have some metals exposure which makes this more redundant than not...plus I have stronger conviction on upside gold fundamentals (this month anyway). Still pondering.
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