$SILJ bulls mine for profits

Bullish option traders who opened upside positions in the Prime Junior Silver Miners ETF (SILJ) over a few sessions are mining large returns today.

Market Rebellion’s Unusual Option Activity Service flagged bullish option activity on a few separate occasions in upside calls.

–On Dec. 21, 10,000 February $18 calls were purchased for $0.85 above open interest of 4,669 contracts with shares at $15.89.

–On Dec. 22, 5,000 more February $18 calls were purchased for $0.73 below the open interest of 15,281 contracts with shares at $15.52.

–And again on Jan. 21, 2,000 more February $18 calls were purchased for $0.15 to $0.20 below open interest of 26,466 contracts with shares at $14.76.

Those calls traded for as much as $2.50 today, at least double their purchase prices. The stock rose by as much as 25.27% in the same time frame, illustrating how quickly options can far outperform their underlying shares.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

The SILJ opened higher this morning to trade up to $18.83 and ended the session up by 14.49% at $17.78 while the price of silver (SLV) forged higher this session.