Issue 114: World's Oldest Relative Value Trade Screams BUY BUY BUY - Masters in Trading Digest

World's Oldest Relative Value Trade Screams BUY BUY BUY

At Masters in Trading, our focus is to empower traders to find high-probability trades through a repeatable process, with a FOCUS on mitigating risks to optimize returns.

The release of our new REDLINE trades embodies this mission. Loyal subscribers of MIT Digest have seen the early results of our newest options scan. This is something that you certainly do not want to miss!

You’re invited this Thursday, 4pm ET where we will release this week’s REDLINE trades live during a webinar.

Only 500 seats are available.

Register NOW.

This is an important event for MIT Digest subscribers.

The World's Oldest Relative Value Trade

The gold/silver ratio is simply the price of an ounce of gold divided by the price of an ounce of silver. Below, I chart the ratio going back 25 years.

Back when the ratio trades lower (like it did in 2010), a trader wanting to capitalize on the ratio rallying higher might have chosen to purchase Silver Futures and Sell Gold Futures. This trade can be done using a 1×1 ratio.

As I write this digest issue, the ratio is hovering close to all-time highs. Traders who want to take advantage of the ratio going lower, can Sell Gold and Buy Silver (1×1).

Traders do not have to put on a spread to capitalize on the ratio trading lower. Instead, you may consider just buying silver because you know that silver is inexpensive relative to gold. Perhaps, you just want to sell gold, because after looking at the gold/silver ratio you determine that gold is expensive relative to silver.

Masters in Trading Digest - Issue 114

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History of the Gold:Silver Ratio

  • Roman Empire:  The ratio was set 12.1
  • 1792 -1834:  The U.S Operated a bimetallic standard, with a fixed ratio of 15
  • 1834-1862:  Congress moves to change the ratio to 16 from 15
  • 1980:  At the time of the last great surge in gold and silver, the ratio stood at about 15.
  • 1991: When silver hit record lows, the ratio peaked at 100
  • 2020: For the year, the gold-silver ratio peaked at 115, the highest it’s ever been since 1915 
  • 2022:  In 2021-2022, the ratio has fluctuated greatly, ranging between 65 and 95.

Source: Investopedia

[VIDEO] Silver Trade Idea

$PAAS is a silver company that we trade when we believe silver is about to move.  In addition to trading Futures, traders can (and should) replicate Silver trade ideas using ETFs, Silver Miners, and Silver Stocks.

In today’s video – we notice expensive upside options in the Options tree for $PAAS.  When calls are more expensive than puts, we refer to this as “upside skew”.

When puts are more expensive than calls, we refer to this as “downside skew”.

$PAAS options tree is pricing this silver miner to trade higher.

Watch the video to see the exact trade shared with members in our Monday Morning trade brief.

Interested in learning a repeatable process to find great trades?

Every Sunday, we share 3 fresh trade ideas with all Wall Street Wiretapper Options members. Join today and get Friday’s REDLINE Trade.

Futures Membership includes a Live Class every Wednesday with Jonathan Rose along with community access to get your questions answered.

Grab a one-month options trial and don’t miss the next redline trade.

FINAL THOUGHTS

WHAT TO EXPECT IN THE NEXT MIT DIGEST

The next issue will be released on Friday.

Until then, trade smart and always manage your tail risk.

Thanks for reading,
Jonathan Rose

P.S. If you've skipped to the bottom, you missed an invitation for this Thursday, 4pm ET where we will release this week’s REDLINE trades live during a webinar. Only 500 seats are available.

Register NOW.

This is an important event for MIT Digest subscribers.

 

Learn more about what a REDLINE TRADE is and why we're excited in this Issue 102 of the MIT Digest.

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