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As 88% Of SLV Shares Outstanding Trade Yesterday, The "Silver Put Buyer" Generates A 68,294,229,502,717.3% Annualized Return
Our friends at Lighthouse Investment Management point out something rather amusing: yesterday, yet another day in which the SLV saw far more notional volume than the SPY, the ETF traded 87.5% of its total shares outstanding. In other words, virtually the entire holder base changed hands.
And just as amusing: for those who recall our post from April 11 in which we highlighted that an SLV put buyer bought roughly $1 million in SLV $25 July puts, well we have an update: as of today, the same mysterious buyer has now made about a 500% return on his or her investment (with a peak of 700% yesterday, or about 68,294,229,502,717.3% annualized). So fascinated is the market with this development that even Dow Jones has dedicated a column on it: "Market watchers want the anonymous April silver bear in listed options to take a bow. The unknown investor's mid-April $1M bet that iShares Silver Trust (SLV) would hit $25 or lower before mid-July is worth more than $7M after this week's plunge. Not just the drop in price, but huge jump in price volatility, has goosed has enriched this trader's options position. "The investor didn't get this trade right. He or she got it spectacularly right."
Of course, at the rate silver is moving today, we may see a few more margin hikes out of the CME just for good measure.
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i used to play dogs and then the ponys. i stopped paper PMs a while ago. just physical and some juniors now and the tsx is a crooked card game at best so i'll be out of that too soon. .
Finally bought some physical just a few minutes ago at $36.05 . A bit disappointed that I wasn't able to purchase around $33 but I was waiting for the wire transfer to reach my bullion dealer . Having missed out back in January I wasn't going to let this oppurtunity pass due to haggling over a few dollars an ounce . Will look to add if it breaks below $30 .
Could be the guy who decided to hike margins at the Crimex/CME.
I want the elitist coxxukker dead!
And anyone who finds the game remotely amusing.
quit pickin on lobotTrader...... :-)
Funny how JPM's trading desk scored huge with those SLV puts, all at the expense of all the guys who were cashing in their 401(k)'s to "buy more physical before it runs out"...
LOL...
The rich get richer.
The clowns who try to fight Uncle Gorilla lose again.
however did 'it' happen, you know how did JP Morg win big and small investors fleeced by the Big Boys?
because the CME nobbled the price with sudden and repetitive rule (margin) changes in the most farcical display of business practice in history, 5 changes in 8 days
it happened in the 1980's when first central banker Volcker then the banksters nobbled liquidity (sudden rule changes in margins) nobbling Silver again... clearly CME have no idea what they're doing right???
..the lesson is not about fighting big Gorillas, it's about not playing any game where authroties (Govt, regulators and exchanges) can rig the game
we've already got stock markets empty of small investors, soon an empty CME/Crimex too ..... cue tumbleweed in Chicago . . . x . . . x . . .
child
So here's a question. What happens if the big banks pull it off and end up shaking everyone out of paper silver? What if they manage to bust down the price so that they can acquire the vast majority of shares and then the whole naked short thing goes completely undiscovered by the general populace. What would the endgame be there? Acquire all the metal and then let the price explode so they can lend it out at higher prices?
I don't think all the big banks necessarily have the same goals here.
JPM is the only player and sooner or later, they're going down.
From everything that i can see 99 proof Physical silver is trading in a range between $40 and $50 (high end) per oz today. These ETFs are out of market from physical anywhere between 15% to 40%. "no honnor among theives" I suppose is the phrase i am looking for.
Interesting point in time for history of finance and economics. If you bought physical, then you are in good shape. if you bought from the devil, well you made your deal. i wonder what they would tell you if you tried to take delivery at $35 per oz? More FUBAR!
June 200 puts on AGQ went up 15,000% in the past week.... kind of puts a mere 500% move in perspective. Someone with a $50k investment in puts last week would have pretty much the same end result as that anonymous trader.
unky knows what's up. 6 string - it wasn't Nassim Taleb. Buying the July $25 puts in mid-april wasn't a precise bet, nor was it made with foreknowledge of the margin hikes. Someone with foreknowledge of the margin hikes would have bought May or June puts, or waited until later in the month and purchased a number of expiries like the May weeklies, the Mays and the Junes, all out of the money. Someone with options knowledge like Taleb would have been more selective about the option, and to add, Taleb doesn't need to put on a bet like this. He runs a hedge fund and has too many other ways to access the markets. Besides, based on his trading style, July is too far out, he would have been in a closer month in smaller size, of course i am speculating here.
Just saying, the purchase sounds like someone with deep pockets who was betting on a large decline based on a rabid defense of the Hunt High @ $50. They didn't know the timing because they bought (at the time of purchase) about 85 days worth of time. Plus, $25 is way too out of the money fo that to have been based on technicals. The weekly silver chart shows clearly that $32.50-$35 is major, major support based on: 1) the 20 week moving avg, 2) 100 day moving avg, 3) september rally trendline, 4) fibonacci 50% retracement support from the september base to the april peak.
http://slv.collective2.com
Since happy hour is now underway in CET Europe- some classic perspective from a discussion took place this morning in an undisclosed location over here-
Valentine, something very important is going on here; just watch.
All right, but y'all gonna get reamed on this one.
Why shouldn't we buy now, William?
Price is gonna keep going down.
Randolph, this isn't Monopoly money we're playing with.
This is Randolph Duke.
Hold that silver order a moment.
Tell me just why you think the price of silver is going down, William.
It's spring time. Everybody's uptight.
Could we please buy now, Randolph?
All right, but if you want to lose money, go ahead.
What are you trying to say, William?
Okay, silver prices have been dropping all morning, which means everybody's sitting in their office and they're waiting for them to hit rock bottom so they can buy cheap and go long. So the people that own the silver contracts are going berserk, ’cause they're thinking, "Hey, we're losing all our damn money, "and Memorial Day is around the corner, "and I ain't gonna have no money to buy my son "the G.I. Joe with the kung fu grip, okay? And my wife ain't gonna make love to me 'cause I ain't got no money." So they're sitting there, and they're panicking, They're screaming, "Sell! Sell!" 'Cause they don't want to lose all their money, right? They're out there panicking right now. I can feel it. They're out there. They're panicking. Look at them.
He's right, Mortimer. My God, look at it!
I'd wait till you get to about 34. Then I'd buy. They'd have cleared out all the suckers by then.
Do you realize how much money he just saved us?
Money isn't everything, Randolph.
Advise our clients interested in silver to buy at 34.
Mr. Valentine has set the price.
The game is just as rigged as it ever was
and will still be rigged next week
Yesterday's monopoly money losses
are Today's monopoly money gains
and Tomorrow's monopoly losses
Pour yourself a drink
And GET PHYSICAL
Very nice. Queue up Trading Places on my Apple TV.
what ypou don't know is if this was taken because the person had a large silver holding to protect the down side
ok, sorry for being a dumbass, but SLV has only gone as low as $32, not $25. Can someone explain to me how this means the put option paid off? Or is the profit still still theoretical, with signs pointing to the target being reached in the next month?
Buyer bought options for a way-out-of-the-money possibility, so he paid cheap cheap for that insurance. Suddenly, his coverage is highly desirable by others, even though it hasn't move into the money yet. The market price of what he is holding has rocketed.
Yes, it is possible that he could sell to a buyer who, if the price of silver never dips under $25 by July, would have the puts expire worthless. (Unless that buyer sells them in turn to someone who feels the need for protection).
cheers pal, makes sense now.
You sir should not be playing if you don't understand the basics of options, nothing person just a fact, it's to get you out of the market that the CME raised mgn req.
thanks for the concern but i've no intention of getting into options or any kind of contracts. strictly olivia newton john round here. learnin fast though :o)
Keep learnin, Boston. Physical's the smart play, but you can also turn a few fast fiats using options if you pay attention. If you had played your hunch on a $42 turning point with June or July options, you would be deep in the money today.
Dude Trix are for kids
Stay away from derivatives. Options and puts make people believe they have all angles covered.
People believe they are cheap insurance.
Belief is a powerful thing.
maybe it was nobody
How have bankers made the real money for centuries? By steamrolling the overlevered. That's all you need to know.
yes but CME have an advertising blitz on CNBC right now saying how they "help farmers" (oh so homely!) and airlines "manage risk"...
...tell me how CME have helped small investors by 5 sudden margin hikes in 8 days and vandalising the Silver price???
Has CME added to market risk or reduced it looking at the sudden collapse in the Silver price from sudden rule changes by CME?
How about all the small investors (some farmers?) who have been fleeced by this rotten farce, how have CME helped them manage risk or has CME sent risk to critical levels by its shambolic mis-management and sudden rule changes??
They're managing their risk, not yours. It's all about phrasing and marketing. Just like mortgage insurance is made to sound like it would help the home owner, since they pay for it, but it actually protects the banks.
I picked up another 30oz this morning at a price that seems like a giveaway compared to previous weeks. Nothing has changed and they won't scare people away from the only way to protect their savings as the system cracks.
on Fri, 05/06/2011 - 12:19
#1247920
yes but CME have an advertising blitz on CNBC right now
10-4 that's the smoking gun right there
Your looking from the perspective of someone who lost money on silver options or futures, the CME didn't change the rules, they changed the mgn requirement to get people out who never should have been in. If you can't pay for the delivery of a full contract don't play. The stock/option/futures market isn't Las Vegas and those of you who play to save airfare to LV or AC should not play.
and here i was hoping you would compare silver to the housing market again.
Blythe @ 270 Park Avenue is a stinking British CDS cunt that should be gang-raped by silver bulls in Hymietown.
A-hahahahaha !!!
Sounds like another night at teh Hamptoms.
Yeah, it's the proverbial "Nothing to see here, please move on" - experience.
Let's be honest... we all dreamed of beating JPM and the insider syndicate... and instead they screwed us. They always win.... they control all the levers of power... all the media... the exchanges... it is hopeless.
Dont be such a troll. It is never hopeless. Roll with the punches.
I'd like some thoughts on this please...
Silver, which was down 5.64% [Wednesday],
lost 1,382 lots of open interest or 1.05%. Since
Friday’s close, according to the CME, July silver
is down 19.05%, but only 1.27% in aggregate
open interest has been shed.
I think this rather remarkable. but I find it
disconcerting for it means that the liquidation that is
needed to clear the market or momo players has not
actually taken place.
Thanks much
You have a very good point, but if this is a superbull then you dont get normal washouts and extremes of negative sentiment and it will spend most of the time in overbought territory.
Liquidation and reduction in OI are distinct issues. This is unorthodox and an over-simplification, but you since you asked:
The immediate CME/Bullion bank concern (within the confines of the silver futures market itself) is not directly related to either covering shorts or the paper price, especially since the short positions were opened with monopoly money to begin with.
The primary concern is controlling the flow of the underlying physical silver, and buying time to keep the Crimex scam alive. The longer the Crimex scam remains viable, the more money they make. By shaking the weak long positions out, they now control more of total open interest, and did so at a lower cost/higher profit than possible in an “fair” market, and there are less "outsiders" capable of removing whatever pot of physical remains in vault through exercise of long contracts.
Since they now control more of the total supply of contracts (both long & short), they have the option, which they will exercise at their leisure, of either selling them back to the sheeple at a profit, or closing their shorts, depending on their current view of the greed vs. fear conundrum.
Another way of looking at the situation is the Crimex is nothing more than a crooked poker parlor. The CME packs some of the seats at each table with shills (the bullion banks) who didn’t actually have to pay for their chips, so there isn’t money in the cage to back all the chips (contracts) on the floor. Marks are drawn into casino and pay up (current margin requirement) and receive casino credit for the balance of chips desired at the cage before taking a seat at the table. The con succeeds (and the Crimex dealer, pit boss and the shills book profits) when the mark loses his chips at the table, not when the excess chips are picked up from the table and returned to the cage (so open interest doesn’t need to decline). As long the number of marks walking back to the cage to cash out the chips is controlled then the con can continue. Sometimes the shills have to collude with house to prevent a run on bank, so a combination of margin hikes (revocation of casino credit) and volatility (big bluffs) is employed, and the clueless mark is often sent scurrying out of the casino with a much lighter wallet.
This is a con worthy of Joe Kennedy and his old business partners before he became head of the SEC and “outlawed” some of the very practices which he formerly excelled in. Nixon abandoned the dollar-gold convertibility in August 1971 by executive order. However, Congress still had to continually devalue the US dollar against gold since the gold price was fixed and its spending habits weren’t. The dollar was devalued by raising the gold price from $35 to $38 on May 8, 1972 by PL 92-268. The dollar was again devalued by raising the gold price from $38 to $42.22 on October 18, 1973 by PL 93-110. Since the fixed gold price problem was getting to be like the debt ceiling problem is today a decision to float the gold price was made. The Crimex gold contract was launched on December 31, 1974. Coincidentally on December 31, 1974 the prohibition of private ownership and trading of gold in the US was revoked by PL 93-373. Since the original purpose of the Crimex gold contract was to control the devaluation of the dollar- the US Government has been in bed with Crimex and its bullion bank shills since its very inception, just like the local police and politicians on the take who granted the license and continue to allow the crooked poker hall to remain open.
Paging US Uncut....are you out there lurking somewhere?
Please return and read Urban Redneck's post.
Silver traders must balls of steel, because it is a crazy market. Have been in Gold and miners for 10 years, but only dabbled in SLV and Silver Wheaton. Compared to silver, gold trading is like watching paint dry.
The longer term chart on Silver shows a significant upward spike above $18.00 since last summer. It doesn't seem outside the realm of possibilities that silver would revisit that price territory.
One problem with silver is that when copper remains north of $2.50 a pound and silver prices are elevated there is a lot of new physical silver produced each month. Gold production is more inversely related to price as lower grade ores are processed when prices are high, thereby reducing output and extending mine life. Good luck trading.
Silver production only increased 2.5% last year, FYI.
Yes the Silver Institute says the increase was 2.5% . However, another interesting trend was that production from primary silver miners increased by 5%.
The point I am trying to make, but did not express well in the first post, is that silver is not a particularly rare element. I sevral years as a hardrock geologist around the Carlin Trend in Nevada and most assays in areas with significant mineralization came up with silver values. When prices are elevated there are many smaller marginal properties particularly in Mexico, South America and probably China too, that can be brought into production quite quickly and without the mega investments and lead times required for Gold, Copper, Moly, Lead-Zinc. etc. Silver supply can be very price elastic.
There is a ton of fundamental silver clap-trap from may web sites (have you ever noticed that they are also selling silver investments too). Anyone who invests in silver based on fundamentals best have the stomach for high volatility. As demonstrated by last weeks pricing action, silver seems more suited for traders.
Pure and unaldulterated BS. Yesterday's price move had nothing to do with the availability of silver mines. Junked.
Silver For The People
http://www.youtube.com/user/BrotherJohnF?feature=mhum
Trade the extremes. But now its over for a while until new trend established.
Perfect technical bounce off the 100 dma.
Easy AGQ pick up for some crumbs.
Now i have no fucking idea what to do.
Still in a bull market for silver?
Depends on how many more rule changes we have next week.
Yeah....the playing field is definitely uneven and the refs are crooked, but any price manipulation scheme always fails in the end. The big question is do we go into a deflationary period or not.
Just noticed (for those interested) on Kitco they have some AE available for $40.91 for US customers only. This whole week on Kitco they had just some silver coins and they were mostly available for just us here in Canada and i dont recall seeing any AE.
And as we speak it had 500+ (two minutes late the 500+ is gone)
Fried(e)
Andddd...no more AE available now - sold (<less then 10 mintues)
Fried(e)
my preferred bullion dealer in the UK sold out of AE about 30 seconds after their price fell below £25 today.
It was Math Man.
Do you guys think owning some phys silver is good? I am new to buying bullion and was looking for some opinions.
Yikes!
You mean you haven't got any yet? You seem alittle late to the party....judging by your "handle".
I'll coin what Aristotle (I think?) said about gold...
...."Silver, get some"