Why I Bought Puts on Silver Today
Yesterday, a widely circulated report highlighted a stark warning from former JPMorgan strategist Marko Kolanovic, who predicts that silver could lose roughly half its value from current levels. Kolanovic argues that the recent silver rally which has seen dramatic gains in a short period of time isn’t rooted in fundamental demand but is instead being amplified by speculative trading. He went so far as to describe the surge as driven by “meme traders attempting to take over the market, suggesting that current pricing might not be sustainable.
I don't necessarily disagree with this thought. Silver has climbed sharply amid macro uncertainty and safe haven demand, with notable year-over-year strength. I think there is some substance and actual real fundamentals so I don't expect these price to hold. A 50% decline in silver’s price over the coming year is an bold prediction.
Given that I think we have run too far too fast, I took a defensive stance in my portfolio and bought put options on silver today. Here’s my thinking:
Volatility is high. Silver’s explosive upside over the past year has created trading conditions that almost always mean sharper swings in both directions not a slow grind.
A 10% drop that I'm predicting creates huge leverage in puts.
Buying puts lets me define my maximum downside. I know what I could lose if silver keeps grinding higher, and that helps me size my bet more responsibly as I hace scaled out of my long positions.
If you want to know my exact trade: 2/9 $90 Put @ 2.76 10 Contacts
It’s worth acknowledging that I don't see major weakness ahead. I think there are structural deficits and industrial demand which could support higher prices or at least limit the downside. But, investing is always about probabilities and managing risk. For now, my decision to buy puts is my way of hedging not just reacting emotionally to price swings, but responding to a credible call for significant downside. If silver does indeed correct sharply, the returns from well-timed puts can far outpace a simple short position or staying long through what might be a painful drawdown.
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That’s all bullshit. It’s them trying to manipulate the number without losing money on paper contracts like they have been since December. Believe what you want. Silver is not stopping any time soon.
Hey I'll play both side like I told Bozz closed those contracts for a nice gain. We will see that pump back to $100 was wild.
I think when anything moves this much this fast there should always be a bit of caution. I guess time will tell how it all works out.
Closed the 10 contracts today at 4.00 or $4000 on a $2700 cost basis so it was a quick few bucks right before it pumped back over $100.
Well done!
The way I see it…. If measured in U.S. Stable Coinage, Silver recently passed the $1 mark, on its way to $9…
I get that the vertical move looks like a bubble, but the industrial demand from solar and EVs is way higher than it was in previous cycles.
Marko may be looking at the wrong charts but with an over supply of paper and a gross under supply of Just-in-time physical. I'm prepared for a buying opportunity when it comes.
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50% drop is too much I think too... It will drop when people take profit, but 50% no way, once it goes that up it probably stays high
Now that the sliver market is bleeding, this is the right time to buy more silver coin actually
Those who have silver are happy and crypto people are crying and things similar to silver will also pump