Seasonally Shorting Silver…Success! A little alliteration goes a long way.
Silver prices tend to decline during the month of June. So at the beginning of the month I bought ZSL (ProShares UltraShort Silver ETF). I just closed the position today for a gain of 11.5% before commission. Woot woot!
So why did I exit today instead of waiting until the end of the month? My reasoning was this:
a) I’d made some decent return so why not cash in?
b) Silver prices are strongly correlated to the strength of the dollar. The stronger the dollar, the cheaper silver gets. Greece could conceivably get its act together in the next few days, in which case the euro might strengthen against the dollar, and silver prices could go back up. And then I’d be smacking my forehead saying “doh!”
And yes, conceivably, Greece could get booted out of the EU, or torture everyone by stretching things out eve more, so that the dollar strengthens even more. But that’s not a bet I want to take. What with the unrealized profit and all.
c) Silver had just had a big move downward on Tuesday, so why risk a correction?
My success with this trade is tempered by two short-squeeze trades that both hit my 7% stop losses. Win some, lose some.