SLV - OTM Puts to Synthetic Call multi leg entry

9 sty

I was long silver for most of 2024, made money both ways through hedged equity (SLV) and various options. I closed by position at $28.50 for a profit, and rode OTM puts to the current 20 day low.

I didn't want to buy at the bottom of the channel because of the overhead resistance where silver futures are now testing. I see a trade setup for a sellside liquidity run (stop sell run) back to around the 25% of the 20 day trading range near support where bullish orderblocks are visible at higher timeframes.

I plan to enter OTM puts 30-60 days out at a strike around approximately 25% the current 20 day range and cover them by buying the underlying (SLV) when they are ITM. The trade setup has a 3:1 risk/reward, but if I can multi-leg enter into a synthetic call I am likely to have little or no risk on the trade, assuming it sets up as I have outlined.

9 sty

Uwaga

Not sure if this is visible, but this is how the trade could unfold.

At 5 contracts on Feb 21, initial risk of $337.50 at current market price. If I am able to pick up 500 shares at 26.47 total risk is $72.50 with unlimited upside and a delta of 304.

optionstrat.com/wHQN8ebF9QVH

9 sty

Uwaga

Also note, I'm trading options on SLV, but using the microsilver contract for my analysis as it is much clearer.

28 sty

Zlecenie aktywne

So I did take this trade eventually though I initially failed at the multi leg entry (which I usually do, I think I'm just going to stop trying it). Silver spent a lot of time mitigating the trapped sellers and went much higher than I thought, however on this most recent break below 30.10 (SIL!), I went long March 21 27 synthetic calls.

I believe a breach into the upper 31.80 - 32 range is imminent.

29 sty

Uwaga

I've reversed into a short synthetic future after the break of the upper liquidity range I noted, I suspect a sellside liquidity run is nigh. The position is now net riskless and delta negative.

29 sty

Uwaga

I closed that synthetic short after reviewing my decision engine. While a buyside liquidity run has occurred and things are extended, there is no clear evidence of selling activity and thus I have to hold.

Rules be rules.

29 sty

Uwaga

So I'm seeing conflicting signals, I don't have an explicit sell signal but we are sitting at resistance and the potential for a sellside liquidity run is there. I opted to roll a put to 28, I'm still holding the 27 so I'm effectively in a straddle which is FWM at this point.

30 sty

Uwaga

Closed out the initial 27 put having rolled up to 28. Overall risk on position has been reduced by realizing a small loss, silver looks like it wants to run.

30 sty

Uwaga

I wrote a short synthetic future and bought an ITM 27 call, then sold my underlying shares for a profit. This reverses me into a negative delta position, risk is minimal, a sellside liquidity run is reasonable and I've got plenty of time for it, I'll have plenty of options assuming one does occur.