$SLV call prices triple

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

On May 27, Market Rebellion’s Unusual Activity programs found that 18,500 August $16 calls were purchased for $1.02 to $1.06 with shares at $16.00. This was clearly a new position, as open interest in the strike was only a mere 208 contracts before the activity appeared.

Those calls traded for as much as $3.91 today, more than 3.5 times their average purchase price. The stock rose 24.19% 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 6.99% to $19.82 in late-day trading. The exchange-traded fund, which tracks the price of silver, has risen with the recent rally in precious metals.