Silver is crashing back to earth after having its best day in more than 12 years on Monday as the Reddit rebellion set its sights on the commodity as well as several miners and the SLV ETF that tracks the silver space.
While the rally is certainly taking a rest today, plenty of options traders used Monday as a way to position themselves for the possibility of much bigger gains in the near future.
"[SLV] saw more than five times the average daily call volume trade today, and it normally trades quite a lot, about half a million contracts. Today, more than 2.5 million contracts [traded]. Most of that activity was concentrated in the 30-strike calls that expire at the end of this week, next week, and also going out to March," Optimize Advisors CIO Michael Khouw said Monday on CNBC's "Fast Money."
The calls expiring in March were trading for about $2.10 per contract on average, meaning buyers are looking at an SLV upside break-even price of $32.10, or about 30% higher than where it closed Monday's session. As SLV falls in Tuesday's session, those are now even further out of the money.
The SLV was trading 7% lower in Tuesday's session.