Silver ETF Continues Bounce From $32 a Share

Includes: DBS, SIVR, SLV
by: Tom Lydon

The largest exchange traded fund for silver rose nearly 2% Friday to cap a strong week. Traders are wondering if the ETF’s recent bounce at about $32 a share indicates a short-term floor.

The iShares Silver Trust (NYSEArca: SLV) is also rising to test its 50-day moving average.

“Yesterday, we saw buyers of June 30 puts in good size while selling the July 25 puts,” said Paul Weisbruch, vice president of ETF/options sales and trading at Street One, in a note Friday.

“It is very likely that these options players got long SLV near the low end of the recent range, and are buying cheap downside protection against a possible reversal with the June 30 puts, while selling the well out of the money July 25 puts and expressing the sentiment that ‘it is unlikely SLV will fall as low as $25,’” he wrote.

Other ETFs for silver include ETFS Physical Silver (NYSEArca: SIVR) and PowerShares DB Silver (NYSEArca: DBS).

iShares Silver Trust - (click to enlarge)

Disclosure: Tom Lydon’s clients own SLV.