Hello,
Personally, I have gained exposure to silver by selling out of the money puts on the SLV ETF.
For example, I sold a put option to buy SLV at $28 in January 2012. Each contract is worth 100 hundred shares of the stock. For agreeing to take on that stock at the time, I received $251 per contract.
The actual amount of money that I put at risk was $2549 per contract, because for every $2800 I agreed to pay for silver, I had received $251.
This works out at a 11.25% annualised return, if SLV does not fall below $25.49 by 2012.
[FONT="]( [/FONT][FONT="]Return = 2.51/25.49 = 9.8% or an annualized 11.25%[/FONT] )
By now, SLV is trading at $36.39, so I am making money. However, if this went wrong and I wanted to get out of this contract, I simply buy the put option back. (Of course, I could set up a stop loss to do this automatically for me.)
In essence, I am;
(a) getting exposure to the SLV option
(b) keeping the liquid cash in my account until required to buy the stock
(c) making a return on that cash while waiting for the time value to expire from the contract
Hope this gives you another insight into how to answer your question!
Susan Hayes