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silver 2010 call spreads..
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Thread: silver 2010 call spreads..

  1. #1
    Join Date
    Dec 2008
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    195

    Lightbulb silver 2010 call spreads..

    for those interested i just priced call options for the 5000 oz silver contract.. december 2010 $20 strike prices sell for $7400. december 2010 $24 strike price sells for $5400. those prices are the "right "to buy at the call option price at any time prior to expiration of the dec 2010 contract but " not obligated to".....
    example . november 2010 ... silver is at $26.44 u have the right the right to exercise your option to buy the dec 2010 contract at 20 per ounce or sell the option which at that time will be $6.44 cents in the money or 32,200 worth plus time value left.

    im planning to buy the dec 2010 $20 call and sell the dec2010 $24 call for a total cost to me 2000. buy@7400 sell the 24 @5400 cost 2000.
    above example 32,000 profit on 20 call 12,000 loss on 24 call, profit of 20,000 maximum. maximum loss possible 2,000.
    i hope this info helps some, may not be right for most people but ill try it.

  2. #2
    Join Date
    Nov 2008
    Posts
    49

    Default

    I wish I could buy CEF calls...
    It is your rules that make unlawful beings. You would get along better if you would just trust each other to treat each other appropriately, but you don't. So you keep making laws -- until you make criminals of everyone.

  3. #3
    ccjoe is offline Senior Member Site Admin
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    Default

    Thanks Tim for trying to help but I have a liberal arts head and it's over my ability to grasp.
    I want to do exactly what you are doing, I think? in a couple months, but have NO clue? Is this better than just buying physical possession silver? How so? Should I just hook up with a commodity broker and stop trying to grasp everything?
    ccj

  4. #4
    Join Date
    Dec 2008
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    Zionot, Squashkenazi
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    11,577

    Default paper silver lol

    Quote Originally Posted by ccjoe View Post
    Thanks Tim for trying to help but I have a liberal arts head and it's over my ability to grasp.
    I want to do exactly what you are doing, I think? in a couple months, but have NO clue? Is this better than just buying physical possession silver? How so? Should I just hook up with a commodity broker and stop trying to grasp everything?
    ccj
    Grasp this joe,

    Brokers can (and will) go broke.

    Then all you and tim will have is receipt of paper.
    "I foresee little future in 'the price of silver', I see a huge future for 'the price in silver'." - heartbone
    "The truth is called hate by those who hate the truth." - K

  5. #5
    Join Date
    Jul 2008
    Posts
    76

    Default

    Quote Originally Posted by silverheartbone View Post
    Grasp this joe,

    Brokers can (and will) go broke.

    Then all you and tim will have is receipt of paper.
    quoted for truth.

  6. #6
    Join Date
    May 2009
    Posts
    33

    Default Hmm

    Quote Originally Posted by tim View Post
    example . november 2010 ... silver is at $26.44 u have the right the right to exercise your option to buy the dec 2010 contract at 20 per ounce or sell the option which at that time will be $6.44 cents in the money or 32,200 worth plus time value left.
    I am never one to worry too much about a $2K loss if the upside is there. But the assumptions required to capture the profit require high silver price. Tim's example called for a price of $26 spot for silver. That may be a bit tough to achieve.

    Don't get me wrong, I am not saying that silver doesn't have that value: it's just that the market/public sentiment is far from that position. The few scenarios that I have seen that go that high (and to be truthful, they usually go much higher) are based on TSHTF type of scenarios. Unfortunately in that type of situation, paper based trades will probably be invalidated by socioeconomic conditions.

    But hey, it's not that much money to lose, and you could make a pretty penny. Good luck, Tim. You have certainly given me a new way to think about options. Great researching!
    _____________________________________________

    Keep your expectations real, and you will rarely be let down.

  7. #7
    Join Date
    Dec 2008
    Posts
    195

    Red face cost /reward...

    the above example detailed the risks and rewards... take it for what it is just hoping to contribute some useful info for some people as of yet i have not got that spread yet.

  8. #8
    Join Date
    May 2009
    Posts
    33

    Default I thought it was a great perspective

    I appreciated the idea. I love when people think outside the box. Your approach is inspiring and prompted me to look into some calls and puts prices myself.

    Thanks again.
    _____________________________________________

    Keep your expectations real, and you will rarely be let down.

  9. #9
    ccjoe is offline Senior Member Site Admin
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    Default

    Thanks for the differing views from the several previous posters.
    I just wish I got my degree in something anent economics instead of Poly Sci/ His

  10. #10
    Join Date
    Dec 2008
    Location
    Zionot, Squashkenazi
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    Cool Like "Madoff", the term "broker" is so in your face.

    Quote Originally Posted by ccjoe View Post
    Thanks for the differing views from the several previous posters.
    I just wish I got my degree in something anent economics instead of Poly Sci/ His
    You are welcome.
    A degree in economics is about as valid as a degree in mystical voodoo.
    If anyone reading this is going to college,
    think about pursuing something constructive or helpful as a career,
    try engineering or teaching.
    "I foresee little future in 'the price of silver', I see a huge future for 'the price in silver'." - heartbone
    "The truth is called hate by those who hate the truth." - K

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