The Rise of Retail

Hey There Income Hunters,


The GameStop episode is a groundbreaking event.


It’s magnitude really can’t be overstated.


The result is a major step forward towards levelling the playing field in the capital markets arena. 


The little guy may actually make up some ground.


And before I get into what this means for the market, let’s get one thing straight …


The only illegal practice going on here is “Naked Short Selling” by the institutional investors (i.e. hedge funds), which is short selling shares that have not been affirmatively determined to exist …


According to financial data firm S3, GME short interest is currently 113% of the floating supply. See the chart below.


So, the illegal practice continues!


A Long Time Coming

The GameStop episode is the culmination of 20-years of technological, communication and connectivity advancements that finally make the markets fair-game for all …


However, for a total breakthrough to be complete, regulators must acknowledge the illegal activity engaged in by the hedge funds as well as their prime brokers, who are the largest banks …


So know this: our  capital markets system is broken. (Check out my column about the biggest bank heist in history for a review of our financial system and the embedded inequality …)


But the Rise of Retail will help force change!


And I have hope the current administration will put through the reforms necessary to redistribute wealth to honest traders like you …


While at the same time facilitating an increase in total wealth through infrastructure programs that create real jobs as opposed to funneling more cash through the banks.


It sounds like retail is a fan of one of my favorite Blue Wave Specials …


iShares Silver Trust (Ticker: SLV)


Let’s take a look at how to play for a breakout.


Time to Focus on a Possible Breakout in SLV…


You can see from the longer-term chart on SLV that we closed on Friday right at the downtrend line …


A gap open above the downtrend should be bought with a stop on a close back below… 

SLV could trend higher towards the $34 level quickly …


A fast play 

If you are looking for a quick $5 move higher on the breakout, buying an outright call will give you the best bang for your buck …


$310 would be your maximum loss per contract.


The profit is shown in the risk profile below… With an outright call option position, your max profit is theoretically unlimited, since a stock’s price can rise infinitely …

Let’s take a look at the risk profile …



Bring it Home

When we see a market like silver on the move, an outright call instead of a call spread is worth consideration. We use call spreads when you may need more time for the trade to develop.


When you’re playing for a breakout and anticipate a quick move… the outright offers greater upside and you can deploy trailing stops to stay in the trade longer …


An SLV 27 call trailing stop is an order type that would trail the market price of the call by let’s say 10% …


If the 27 call market price drops by more than 10% the position would automatically be closed-out. However, if the market never drops by 10% and increases to $40 you are still in the trade.


That, Income Hunters, is how you give yourself a chance to hit a “Home Run” …

On a trade that offers real potential… Use trailing stops to “stay in the Game" while managing downside risk.


Good Luck and as always …


Live and Trade with Passion My Friends,


Griff

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