re: SLV

quote:

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What?

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Buying the right to buy at a certain strike price. Selling the right for someone to sell to you at a certain strike price. Without owning the security. Called being blind, or being naked in the trade.

Blind and naked derivatives trading. Level IV for those that care.

It got all the Libtards upset after the last financial crisis we had. They trade blind and naked, but didn't have the capital to cover when they were called.

Somewhat like selling short. Better be able to cover, and cover in a hurry if it goes the wrong way.

In the SLV example I cited, your worst case scenario is that the call you purchase expires worthless, and the put you sell gets exercised, obligated you to buy 100 shares of SLV, at $20.00 per share, no matter what it is actually trading at. Also in the example I gave, after you buy/sell, you get paid. The selling price of the put you sold is greater than the cost of the call you purchased.

I do it all the time. Mostly always with a security that has predictable swings, such as paper silver. SLV. PSLV actually can back what they claim to own. I highly doubt SLV owns that much silver. I won't bore you further with the reasons, which are all public already anyway.