- Noel Smith & Leo Capalleja
What To Do About Silver
The largest silver ETF by assets and volume, SLV, has rallied about 28% this year. Assuming you are not already long, what is the best way to enter a new trade?
We observe that the price ratio of silver to gold is approaching levels unseen since September of 2019. A large chunk of this rally has happened over the last few trading days.
The recent sharp rally has also caused silver volatility to abruptly spike. The interesting aspect of this spike in volatility is that, in contrast to the March volatility spike, the speed of inversion in the volatility term structure has been much faster this time. Due to its high speed, we consider this inversion to be much more temporary than the one we observed in March.
We believe there may be opportunity to profit from this sudden inversion by selling short-term and buying mid-term volatility through call option calendars.
Be advised that investments may go up as well as down for any reason, and past performance of a stock is no guarantee of future performance. These ideas are for educational purposes only and are not a recommendation or solicitation. C.A.M. or its employees make no representation as to the timeliness, accuracy or suitability of any content on this website, and cannot be held liable for any irregularity or inaccuracy.