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 Silver Futures and Options Market Trading

 

Free Online Trading Platform Practice Account

                                                                

*The information contained within this webpage comes from sources believed to be reliable. No guarantees are being made to the content's accuracy or completeness.

 

The History of Silver and Silver Futures

As early as 700 B.C., the Mesopotamian merchants used silver as a form of exchange. Later, many other civilizations also came to recognize the inherent value of silver as a trading metal.

The ancient Greeks minted the drachma, which contained 1/8th ounce of silver; and in Rome, the basic coin was the denarius, weighing 1/7th ounce. And letís not forget the English shilling "sterling," originally denoting a specific weight of silver, which has come to mean excellence. Silver is considered by many investors to be an inflationary hedge and a currency hedge against devaluing currencies.

 

COMEX Silver Futures and Options Quick Facts

  • 5000 ounce contract size

  • one cent move equals $50

  • trades Jan., Mar., May, July, Sep., Dec., Serial

  • Silver futures symbol (SI)

 

Here is the option strategy guide for metals courtesy of the CME Group.

Metals brochure

 

In 1792, silver assumed a key role in the United States monetary system when Congress based the currency on the silver dollar, and its fixed relationship to gold. Silver was used for the nation's coinage until its use was discontinued in 1965. In 1972 President Richard Nixon took the United States off of the gold standard which led to the dissolution of the Bretton Woods currency system. Mexico is the only country that still uses silver in its coinage.

Today, silver is sought as a valuable and practical industrial commodity, and as an appealing investment. The largest industrial users of silver are the photographic, jewelry, and electronic industries often use silver futures and options to hedge their risk. Silver conducts heat and electricity better than any other metal. Silver is used in cell phones, plasma TVs, computers and many other electronic devices. Unlike gold, silver is considered non-recyclable because of its minute density within the electronics that it is used for. In other words, it is unlikely that someone will break apart their cell phone to reclaim 10 cents worth of silver used in its production.

 

Mining companies, fabricators of finished products, and users of silver-content industrial materials can use the COMEX Division silver future and silver options contracts to manage their price risk. COMEX has recently merged to become part of (NYMEX). As a precious metal, silver and silver future contracts also play an important role in investment portfolios as an inflationary hedge.

During the September 11 terrorist attacks the COMEX was destroyed but within days the silver futures and silver options markets were trading again. This is a testament to the strength and reliability of the silver futures markets and the commodity exchanges.

 

Why Trade COMEX Division Silver Futures and Options?

Silver's importance in world markets and responsiveness to world events make COMEX Division silver future and options an important risk management tool for commercial interests as well as an exciting, potentially rewarding opportunity for those investors who seek to profit by correctly anticipating price changes. Learn More >>>

 

Trading silver futures on the COMEX Division offers a number of advantages:

  • The silver futures contracts are standardized by quality and quantity and are widely accepted and therefore a liquid financial instrument.

  • The exchange offers cost-effective silver futures and options trading and risk management opportunities.

  • COMEX silver futures prices are widely and instantaneously disseminated to the world as a price reference.

  • COMEX allows hedgers and speculators to trade anonymously through a futures broker who act independently for traders.

  • While silver futures are seldom used for delivery, performance is guaranteed. Counterparty risk is absent from transactions executed on the exchange.

 

Silver Future Contracts

Silver futures contracts are firm commitments to make or accept delivery of a specified quantity or quality of a commodity during a specific month in the silver futures at a price agreed upon at the time the commitment is made. Approximately 1% of silver futures contracts traded each year result in delivery of the underlying commodities. Instead, traders generally offset their silver futures positions before their contracts mature. The difference between the initial purchase or sale price of the silver futures contact and the price of the offsetting transaction represents the realized profit or loss.

Trading in COMEX Division silver future contracts is conducted for delivery during the current calendar month, any January, March, May, and September thereafter falling within a 23-month period and any July and December falling within a 60-month period, beginning with the current month.

 

Silver Options

Because of the global nature of the metals markets, their prices can be volatile. The metals industry and other commercial market participants have learned to cope with this price uncertainty by actively hedging against adverse silver futures price movements. While silver futures are among the primary risk management tools available, silver options on futures open a host of versatile, economical trading strategies.

 

Options on silver futures provide;

  • A limit on potential loss to the buyer.

  • The ability to hedge without foregoing the benefits of favorable price movements in the silver futures market.

  • The availability of hedging insurance at many different levels of cost and degrees of protection.

By using silver options alone, or in combination with silver future contracts, strategies can be found to cover virtually any risk profile, time horizon, or cost consideration.

COMEX Division silver options are offered for trading in each of the following contract months: March, May, July, September, and December. Additional contract months - January, February, April, June, August, October, and November - will be listed for trading for a period of two months. A 24-month option is added on a July and December cycle. The silver options are American-style and can be exercised at any time up to expiration.

There are two types of options, calls and puts. A call gives the holder of the silver option the right, but not the obligation to buy the underlying silver futures contract. Conversely, the put gives the holder the right, but not the obligation to sell the underlying silver futures contract. Puts are usually bought when the expectation is for neutral or falling prices; a call is usually purchased when the expectation is for rising prices. The price at which an option is bought or sold is the premium.

 

 

*Contract information changes from time to time. Please click here to see the most recent contract specifications and click here for the most recent trading hours.

 

COMEX Division Silver Futures and Options

Contract Specifications

 

Trading Unit

Futures: 5,000 troy ounces

Options: One COMEX Division silver futures contract

Trading Hours

Silver Futures and Options: 8:25A.M. To 1:25P.M., New York time, for the open outcry session.

Trading Months

Silver Futures: Trading is conducted for delivery during the current calendar month, the next two calendar months, any January, March, May, and September thereafter falling within a 23-month period, and any July and December falling within a 60-month period beginning with the current month.

Silver Options: The nearest five of the following contract months: March, May, July, September, and December. Additional contract months - January, February, April, June, August, October, and November - will be listed for trading for a period of two months. In addition, a 24-month option is added on a July - December cycle.

Price Quotation

Silver Futures and Options: Dollars and cents per troy ounce.

Maximum Price Fluctuation

Silver Futures: Price changes for outright transactions, including exchanges of silver futures for physical (EFP), are in multiples of one-half cent ($0.005) per troy ounce, equivalent to $25 per contract. For straddle or spread transactions, as well as the determination of settlement prices, the price changes are registered in multiples of one-tenth of a cent ($0.001) per troy ounce equivalent to $5 per contract. A fluctuation of one cent ($0.01) is equivalent to $50 per contract.

Maximum Daily Price Fluctuation

Silver Futures: Initial price limit of $1.50 above or below the preceding day's settlement price. Two minutes after either of the two most active months’ trades at its limit, trades in all months and in silver options will cease for a 15-minute period.

Options: No Price Limit.

Last Trading Day

Silver Futures: At the close of business on the third last business of the maturing delivery month.

Silver Options: Second Friday of the month prior to the delivery month of the underlying futures contract. Two-month options - second Friday of the calendar month which is two months after the month in which the option is listed.

 Delivery

Silver delivered against the silver futures contract must bear a serial number and identifying stamp of a refiner's officially listed brand. Delivery must be must be made from a warehouse or vault licensed or designated by the Exchange specifically for the storage of silver.

Delivery Period

The first delivery day is the first business day of the delivery month; the last delivery day is the last business day of the delivery month.

Exchange of Futures for Physicals (EFP)

The buyer or seller may exchange a silver futures position for a physical position of equal quantity by submitting a notice to the Exchange. EFPs may be used to either initiate or liquidate a futures position.

Trading Symbol

SI

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To see other metal futures visit gold futures, copper futures and platinum and palladium futures.

 

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The information presented in this commodity futures and options site is not investment advice and is for informational purposes only. This information can be considered a solicitation to enter into a derivatives trade.Investments in commodity futures and options involves a high degree of risk, your investment may fall as well as rise, you may lose all your original investment and you may also have to pay more than the original amount invested. Past or simulated performance is not a guide to future performance. Futures Trading is not suitable for everyone. This site provides information on online commodity trading, online future trading, commodity future online trading, commodity options, futures trading commodity brokerage.