RE: My Top 5 Silver Mining Investment Picks For 2018
Great analysis, First Majestic is actually one of my core positions. I bought a crap ton of it in December 2015 around $2.75, and it remains one of my larger positions. In hindsight I wish i'd bought more.
I currently have call options on Paas as well as AG. I actually wrote about this trade. Options are risky and I'm not recommending them to anyone, but I have had good luck buying call options at bottoms. Such as December pre-fed hike and just recently, I bought some Ag calls after this latest washout. I check the prices regularly when's there's capitulation in the metals prices.
For those who don't understand what an Option is, it's a risky "YES" or "NO" bet that the price of something will rise or fall within a certain period of time. Most options expire worthless, as people are generally unable to predict the future. They offer incredible leverage.
However if sentiment is particularly bad, and you think the option is mispriced, you can find some ridiculous deals. I recently bought some $6 AG calls for $.35 a share! If the price goes to $7 I'll make 185%. If it's goes to $10 I'll make 1000%. If the price does not change I will lose my investment.
So it is not for the faint of heart, but something to consider when an equity reaches an extreme one way or the other.
That is what I love about options investing though. You determine your max possible loss when you put on the position and yeah, there is that opportunity for big % returns.
Over all my years of investing in many asset classes, the use of options is still my favorite.
Yeah, me too @scaredycat. It can be an emotional rollercoaster though, so from a piece of mind perspective, I much prefer stocks and the physical metal, but man I've hit some real winners and judging by today's market action I'm crossing my fingers that I'll be right again. Either way, I'll write an article in 2 months as to whether I did or did not lose my ass on this trade! 😅
I have always like the idea of Call options as a great way to get exposure to potential upside while limiting your downside to the options cost. Highly likely you will lose it all but like you said, leveraged when it hits.
I just picked up a few more shares of First Majestic today.
I've never used options before, but have been learning about them here and there for the past year.
Nice! Ag has taken a beating lately with the strike last year, which in turn suspended production, which in turn lowered earnings. If that wasn't bad enough, the silver price slid and Ag become a favorite victim for the shorts. Any shorts left however I think are about to get squeezed... hard over the next two months.
As for options, they are a good way to lose money unless you are writing them! (for income) Being on the buying side, puts you at an inherent disadvantage. For me, I'll only buy an option when my conviction level is EXTREMELY high, and the price is very cheap.