Options traders have been betting heavily against a silver exchange traded fund this week as the metal ETF has followed the commodities sector lower.

Trading of bearish options contracts Tuesday on iShares Silver Trust (NYSEArca: SLV) surged to nearly four times the average over the past month, driven by a single trade for a second day, Bloomberg reported.

An options trader on Monday placed a $1 million wager the silver ETF will decline 37% by July. The iShares Silver Trust is up nearly 30% year to date but some traders are positioning for a correction after the ETF’s strong run. A newsletter recently warned that when the silver ETF pullback arrives, it could be “harsh and swift.”

iShares Silver Trust

For full disclosure, Tom Lydon’s clients own SLV.

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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