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Trade sees silver ETF losing its luster

Mike Yamamoto (mike.yamamoto@optionmonster.com)

The price of silver has come down since rallying strongly last month, and one trader is taking positioning for more declines in the ProShares Ultra Silver Fund.

optionMONSTER's Depth Charge system show that 2,812 December 45 puts were purchased for $0.15 and $0.20 on Friday, almost all of them in a 3-minute span in the last half-hour of trading. The volume was well above the strike's open interest of 1,079 contracts at the start of the session, indicating that this was fresh buying.

The AGQ fell 2.39 percent on Friday to close the week at $49.88, just below its 100-day moving average. The exchange-traded fund, which is designed to provide twice the return of silver bullion in either direction, had run from about $46 to $57 from early to late November but has pulled back since then.

Friday's puts were not tied to any stock trading identified by our systems that day, but they could have been bought to protect a long position opened at an earlier date. Otherwise, this could be a straight bearish bet that the shares will fall more than $5 by the end of this week. If the AGQ is above the $45 strike price at that time, the puts will expire worthless. (See our Education section)

Total option volume in the name was double its daily average for the last month. Puts outnumbered calls by 60 percent.

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