UPDATE 1-Bears hit silver ETFs with metal down

* Speculators eye SLV calls banking on ETF recovery

* SLV protective put buyers seek to lock in profits

* Options activity heavy, 775K contracts traded in SLV

(New throughout, updates ETF prices, option volume)

By Doris Frankel

CHICAGO, April 26 (Reuters) - Silver-backed exchange-traded
funds slipped on Tuesday as many investors took some profits
off the table following a recent surge in the metal.

Silver was on course for its largest one-day fall in six
weeks on Tuesday after touching a 31-year high in the previous
session. For details, please see [ID:nLDE73P0XB].

"We are seeing investors taking profits on the metal after
this incredible run-up which was fueled largely by
speculators," said TD Ameritrade chief derivatives strategist
Joe Kinahan.

"We often see this case in commodities where speculators
will come in a bit late to the party looking for the trend to
continue to be their friend," he said. "But the problem here is
that silver was nearing all-time highs this week."

The iShares Silver Trust (SLV.P), the world's largest
silver-backed exchange-traded fund fell 3.9 percent to $44.01
on Tuesday after hitting a 2011 high of $47 on Monday.

Options sentiment is mixed in the ETF. Speculators are
looking at call options as a buying opportunity expecting the
fund to rebound from its pullback. "We also see protective put
buyers looking to lock in their profits from this great move in
silver," Kinahan said.

The ETF saw heavy trading in its shares and options with 17
million shares changing hands and 775,000 options contracts
trading by early Tuesday afternoon, according to options
analytics firm Trade Alert.

Trading hit a record 34.93 million shares on Monday
accompanied by the trading of 1.4 million option contracts,
which was 3.8 times the average daily volume.

On Tuesday, spot silver XAG= fell as much as 4.9 percent
to a session low of $44.63 an ounce, after hitting $49.31 on
Monday, its highest since touching $49.48 in January 1980.

"Everyone has heard that silver is in a parabolic uptrend,
but it now appears ready to take at least a respite to calm
down a bit," wrote Larry McMillan, president of options
research firm McMillan Analysis Corp, in a report.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Investors flock to silver ETF options [nN25225308]

Silver technical outlook [nL3E7FP0WW]

TIMELINE-A brief history of silver [nL3E7CJ0DO]

Gold,silver ETFs holdings: link.reuters.com/sen29r

ANALYST VIEW-Silver charges ahead [nL3E7FI1AA]

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

One top trade is a May $35-$37 two-to-one put ratio spread
which traded 10,000 times at 3 cents per spread. The trade
might have been initiated by a shareholder to help hedge recent
gains or it might be a bearish bet targeting $35 per share for
the fund before May expiration, said WhatsTrading.com options
strategist Frederic Ruffy.

The Global X Silver Miners ETF (SIL.P), a silver mining
ETF, also dropped 2.55 percent to $27.83 as the price of silver
fell. The ProShares UltraShort Silver ETF (ZSL.P) jumped 7.7
percent to $15.72 on Tuesday. This ETF seeks to double the
inverse of the daily change in spot silver.

Expectations of tighter monetary policy may also dampen
interest in silver. The Federal Reserve began a two-day meeting
on Tuesday, and the U.S. central bank is expected to soon end
its $600 billion bond-buying program.[ID:nLDE73P0XB]

(Reporting by Doris Frankel; Editing by Andrew Hay)