$SLV call prices quadruple

Bullish option traders have scored exponential gains in the iShares Silver Trust (SLV).

On Aug. 7, Our market scanners flagged the purchase of 25,000 September $17 calls for $0.26 to $0.28 above open interest of 2,740 contracts with shares at $16.01. Co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded for as much as $1.09 today, more than 4 times their average purchase price. The stock rose 12% in the same time frame, 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.

SLV is up 4.08% to $17.85 in late-day trading. The exchange-traded fund, which tracks the price of silver, has risen with the recent rally in previous metals.