Silver has been basing out, and investors think it's going
optionMONSTER's tracking systems detected a strong bullish tone
in the iShares Silver exchange-traded fund. Put selling is the
strongest theme as trades accept income now in return for betting
that the recent lows will hold.
The September 27 puts mostly fetched $0.61 to $0.63. The
September 26s traded for $0.31 and the September 25.50s brought
in $0.21 to $0.22. More than 5,000 contracts traded at all three
Those investors are now on the hook to buy shares in the fund if
it falls below the respective strike prices on expiration five
weeks from now. The strategy often reflects a belief that a stock
or ETF has established a bottom. Unlike buying shares outright,
some traders prefer selling puts because it doesn't require any
initial cash outlay. (See our Education Section.)
SLV rose 2.02 percent to $27.78 in early afternoon trading. It
peaked around $36 in late February, fell as low as $26 in June
and has been working its way higher since then. The fund has been
consolidating above its 50-day moving average in the last two
weeks, which could make some chart watchers expect a rally.
While put selling dominated the trade early in the session,
activity is now shifting toward call buying, led by the January
2014 45s, the September 30s and the September 29s. Pete also
in SLV last week.
Overall option volume in the fund is almost triple the daily
average so far today.
: I OWN AGQ, WHICH IS DOUBLE-LONG SLV
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.
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