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Silver Wheaton draws bullish bet

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Silver Wheaton has rebounded in recent weeks, and one large trader is looking for more gains by early next year.

More than 5,000 January 24 calls were purchased for $1.82 to $1.84 in about 9 minutes yesterday, according to optionMONSTER's Heat Seeker tracking system. The volume was well above the strike's previous open interest of 1,077 contracts, indicating that this is fresh buying.

These long calls lock in the price where the stock can be purchased through mid-January no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, providing potentially significant leverage, but the contracts will expire worthless if shares remain below $24. (See our Education section)

SLW was up 0.79 percent yesterday to close at $23.02. The silver broker bounced at the $20 level in late May and has been climbing steadily since.

Total option volume in SLW topped 16,000 contracts yesterday, more than double its daily average for the last month. Overall calls outnumbered puts by more than 4 to 1.

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