$SLV call prices keep tracking higher

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

On Dec. 9, Market Rebellion’s Unusual Activity programs found that 3,000 February $24.50 calls were purchased as part of a bullish spread for $0.88 with shares at $22.38. This was clearly a new position, as open interest in the strike was only a mere 906 contracts before the activity appeared.

Those calls traded for as much as $4.96 today, more than 5.5 times their purchase price. The stock rose 25.02% 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.

The SLV closed up 7.08% to $26.76 today. The exchange-traded fund, which tracks the price of silver, hit a new 52-Week high of $27.98 this session.