Yesterday’s market movements were pretty typical of the “risk-off” trade. As investors were selling off equities, they were piling into bonds and other safer havens such as gold and even silver.

With the recent strength in the SPDR Gold Trust ETF (NYSE:GLD), the put spread we talked about in last week’s article Play Gold’s Pullback With This Put Option Trade is progressing quite nicely.

If you missed out on that trade, don’t worry because there’s even more opportunity in the precious metals. Despite silver’s relative weakness compared to gold, the iShares Silver Trust ETF’s (NYSE:SLV) daily chart is shaping up for a potential bullish play.

As you can see in the below, SLV has formed a clean ascending triangle pattern over the past six weeks. Such a formation shows both stabilization in silver prices as well as a minor increase in demand.

Further increasing the bullish appeal to the chart is the fact that there is a lack of overhead supply – a vacuum or price void, if you will. This increases the ease with which SLV can vault higher without encountering any major bouts of selling.

Source: MachTrader

While SLV has risen 13% over the past week and may be in need of a short-term pullback or consolidation, the daily trend is now up and may continue higher to the declining 50-day moving average.

If you want to acquire bullish exposure to silver via the SLV, one good way would be to buy a December bull-call spread. That gets you positioned for a nice run between now and December options expiration. And by offsetting the purchase of a call by selling another one against it, you’re effectively reducing your risk while being positioned to profit from silver’s upside.

Your bullish SLV spread consists of “Buying to Open” a lower-strike call while “Selling to Open” a higher-strike call in the same expiration month (December). What looks good right now is buying the SLV Dec 32 Call (currently trading at $2.70) while simultaneously selling the SLV Dec 35 Call (currently trading at $1.45) against it, for a net debit around $1.25.

The risk is limited to the debit paid at trade inception and the max reward is limited to the distance between strike prices ($35 – $32 = $3) minus the debit paid. Entered at this price, the risk is limited to $125 and the max reward is $175.

At the time of this writing, Tyler Craig had no positions in any of the names mentioned.