SLV Puts Rally On Volatility; Testing Trend Line, 20DMA (SLV, VXSLV Charts)

Silver continued its sell off on Monday and $SLV puts were loving the volatility. On April 25, 2011, a SLV October $41-$33 put spread caught my eye that traded 10,000 contracts on each strike. I'm not sure if it was a backspread or vertical debit spread, but a debit spread made sense as a six month hedge or trade imo.

From the snapshot of the option chain: 10,000 October $41 puts last traded at $3.00 and 10,000 October $33 puts last traded at $1.05. If it was a debit spread, the trader paid $1.95 to put on the trade. With decent timing, SLV volatility spiked on a sell off and the SLV Oct $41 put closed at $4.45 today. Not bad! SLV closed at $42.83. On another note, remember 100,000 July $25 puts traded a few weeks ago? Interesting trade.

The ETF is testing an important trend line and the 20 day moving average. If you look at the weekly chart there is a 2-year ascending channel that could catch SLV if it breaks down. Spot silver is currently trading at $44.83. See a live 24 hour chart of silver spot here. Check out SLV and VXSLV charts after the jump.

SLV 6-Month chart (

SLV 1-year chart (

SLV 5-year chart (

VXSLV (CBOE Silver ETF Volatility Index (