Gann Global Financial

In the Silver, we had experienced a three-day violent rally to the upside, so price has moved into our fan lines (see chart in video), as far as what we had felt we needed to see the market rally in order to get short. Therefore, it’s very possible that a shorting opportunity could be forthcoming. I need to see some more trade, though.

* Please comment on the video at the bottom of the page *

No Significant Breakaway to the Downside Expected in Silver

For example, the July Silver options expire on June 25th. If we’re at kind of the midpoint, then we could be down at 1050 by that point in time. Percentage-wise, that’s a significant move from 1384, let’s say down to 1050. However, the options are so pricey and so expensive that you just don’t have the multiples as far as risk-reward. It’s not that exciting.

In the meanwhile, our better tact is to look to inner short positions in the futures where perhaps the market pattern or price formation will shape up, which will allow us to take a very modest risk with the possibility of a nice reward.

It’s kind of the same situation with the S&P 500 as in the silver because the historic volatility in these options is so high. Even if you’re right in the direction – whether to the upside or the downside – you’re paying through the nose for these options and there just aren’t great multiples available. You might make one-and-a-half times your money. It’s just not exciting.

The ideal is something like the soybean oil where you have the prospect for a 10:1 to 12:1 risk-reward opportunity; being no more right in the bean oil than you would be, say, in the silver market, necessarily. This comes into play, obviously, with regard to looking at the risk-rewards moving into a trade, and those dictating the value of that particular trade action.

So, I’m watching the silver. I like what has taken place. We’ve been sitting on the sidelines, anticipating that if the market did move into these fan lines (see video/chart), then maybe we could do something. Well, that happened. So, the first order of business was moving into the fan lines, and that’s happened.