Silver is a great investment right now and prices could easily shoot above $20 per ounce by the end of this year.  I predict that with the right call options on silver you can make over 100% before the end of the year.
In just a moment I’ll give you all the information you need to take action on an options pick on silver with explosive profit potential.  But first, I want to explain why silver will blast higher.

Silver is a precious metal therefore it does great when people get worried about the stock market, inflation and geopolitical risk.

Silver is a hard asset that holds its value in inflationary times and maintains its purchasing power.  We could see a steep rise in inflation due to all this out-of-control government money printing that’s going on these days.  The deficit this year is on track to be $1.8 trillion and the national debt is over $11 trillion.  The government’s debt load is growing so large that it will lead to higher inflation.

And, silver is also an industrial metal, consequently demand increases when global manufacturing activity rises and silver prices will get a big boost when we finally come out of this recession.  Many experts think we could come out of this recession before the end of the year.  Over 50% of world’s silver demand is consumed by industry and this could rise substantially as business picks back up.  Silver’s industrial uses are the result of unique properties including the highest thermal conductivity, electrical conductivity, and reflectivity of all metals.

Moreover, silver demand greatly exceeds current supply.  Above-ground silver stock-piles are quickly being depleted, so prices for silver should explode higher.  In the first quarter of 2009, buying by the biggest silver exchange-traded fund, the iShares Silver Trust, alone hit more than 1,500 tonnes and the net supply of silver from above ground stock-piles dropped by 14% last year.

Finally, silver is in a technical uptrend.  Moving Average Convergence/Divergence (MACD) indicates a bullish trend. The 50 and 200 day moving average is rising which is bullish for silver.

I have recommended silver in this column numerous times.  In fact, I first recommended that Investor’s Daily Edge readers buy the silver ETF (SLV) on February 5th.  I hope you followed my suggestion.  SLV is up over 18% since then.

The silver Exchange Traded Fund (SLV) represents an easy way to invest in silver.  This ETF is very liquid and cost effective.  You could still buy this silver ETF if you haven’t already.

Plus, I still recommend you buy the physical metal by buying silver bars or coins.

But the real leverage and profit potential comes by buying “long call options” on silver.

You could go out and buy the physical metal for around $15 per ounce and if it goes to $20 then you will make 33%.

A 33% gain would be great…  But you could take the same amount of money and invest it in call options on silver and make over 138%.

Stock options give you the leverage to control silver for pennies on the dollar!  That’s right; you can control over 7 times more silver with options than simply owning the metal itself.

Why make 33% when silver goes up to $20 per ounce when you can make 138%?

Buy Call Options on Silver to Target Massive Profits!

Please keep in mind that option trading is speculative.  Of course I can’t guarantee profits and losses are entirely possible. You should only invest funds you can afford to risk.

You can buy options right on the silver ETF (SLV).  These options are easy to buy at any major brokerage firm and can be purchased online or by calling your broker.

The high-powered, strictly limited-risk option I suggest trades under the symbol (SLVAO).  I say limited risk because you can’t lose more than your initial investment.

One options contract will give you the option to buy 100 shares of the silver Exchange Traded Fund (SLV) at $15 per share.

This options contract (SLVAO) gives you the right to buy (SLV) until January 15th of 2010 at $15 per share.  I think that’s plenty of time to realize big gains of 100%, 200%, even 300% or more… with this pick.

Here are the details for the option recommendation:

Option: January 2010 – 15.00 calls (SLVAO)
Underlying symbol: SLV
Breakeven point at expiration: $15.00 + $2.10= $17.10
Estimated Cost: $420 (2 contracts x 100 Shares x $2.10 premium)
Expiration date: January 15, 2010 at 4:00pm EST

After you have done your homework and if you agree with my recommendation, enter the trade online or call your stock broker and say:

“I want to BUY 2 contracts of the Silver ETF (SLV) January 2010 Call Options, with a strike price of 15.00, symbol SLVAO, at 2.10 points or less, to open.  This order is good ‘til cancelled.”

Close the position if the option trades 50% below your entry price.

Sell the first half of the position if the option trades 100% above your entry price.

Let the second half ride for maximum profits.

If you buy this position and the option is in the money you should exit this position on or before January 15, 2010.

Stock options give you the leverage you need in today’s fast moving markets.  I give 2 to 4 new options picks like this every month in my new options newsletter the Options Power Trader.

Best Wishes,

Ted Peroulakis