$SLV call buyers score with patience

Bullish option traders’ call positions are shining today in the iShares Silver Trust (SLV).

On Apr. 2, Market Rebellion’s Unusual Activity Service found that 11,000 19December 35 calls, expiring Oct. 25, were bought for $1.47 with shares at $30.77. This was clearly fresh buying as no open interest the contract was only 357 before the activity appeared.

Those calls have sold for as much as $16.10 today, a 995.24% return, while the stock rose 66.2% in the same time period, underscoring how 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 SLV finished up by 5.81% to $51.21 today.