The iShares Silver ETF has been trading sideways for months, but yesterday it saw heavy traffic in upside options.
OptionMonster’s tracking systems spotted unusual activity the August 26.50 calls, which traded more than 10,000 times, mostly for $0.84 to $0.89. Those expire at the end of today’s session, so traders are obviously looking for a move in a hurry.
Calls (explain this) lock in the price of buying the exchange-traded fund (explain this), which tracks the price of silver. The options can generate some nice leverage if the stock climbs, but they can lose all of their value from just a small decline.
There was plenty of activity in other strikes, including September 28, August 27.50, and August 28.
The fund rose 1.56 percent to $27.39 yesterday. Calls outpaced puts(explain this) in the fund by about 4 to 1, reflecting the session’s bullish sentiment. Total volume in the name was almost twice its daily average.
—By CNBC Contributor Pete Najarian
Additional News: Four-Year Silver Probe Set to Be Dropped
Additional Views: Silver Prices to Go Higher: Jim Rogers
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Pete Najarian is a professional investor, CNBC contributor, regular co-host of CNBC’s “Fast Money” and co-founder of OptionMonster.com. Najarian has no positions in SLV.
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