Targeting ZSL options
The 2x ETF provides you an opportunity to leverage a silver move
Trading options is a great way to lose a lot of money. In this post we will talk about the buying side of options, which is a great way to lose a little bit of money often.
Since this is my first post on options, let’s get some things out of the way:
The proportion of your investment portfolio you are willing to risk should be very very small. I would recommend you stay under 5% to start. I mean that. A lot of people starting small want to go higher, but it’s just going to slow you down. You will lose too often. If you have $25k to start, you can do small bets of a few hundred dollars. That is a good starting point and a good way to learn.
Call them “bets” too, not “investments.” Be honest with the language. You are gambling on the future happening in a specific window of time. That’s twice as dumb as trying to simply predict the future.
Buying options will usually lose money. We can deep dive into options components in a future post. Right now, you need to know that the options buyer has one way to win, while the option seller has two. The options buyer needs the price to move in his direction. The option seller can have it move in his direction or not move at all. Ti-i-i-ime is on his side…. yes it is!
Before you start, ask yourself why you want more money. If the reason is because you need external validation of your worth, then you should close this post and go work on the self. There are good reasons to want to make money, but most options players are seeking validation. It makes them take bad risks. And they never find it.
So with those caveats out of the way, let’s talk about how you can set up a basic bet to leverage up in case of a move on silver.
First, we’re going to target a price for silver. In the EPJ Daily Alert, Robert Wenzel conservatively forecasted that silver would be $37 by year end. That prediction doesn’t look good right now, but let’s go with $35. According to Kitco.com, silver is currently $25.88. A rise to $35 would be a rise of 35.24% in the silver price.
Next, we target an options expiration date. I am going to target February 2022, which gives us a little bit more time than year end. And for which we have options contracts available for ZSL (The Feb 18, 2022 option expiration is the furthest out ZSL contract one can buy today.).