Deutsche Bank has reported ongoing volatility in Silver prices, which have risen dramatically since early 2025. Despite a recent pullback, Silver’s value remains over 260% higher compared to the start of the year.
Silver’s current price has not surpassed its peak in real terms since 1980. Interestingly, as of January 9th this year, Silver in real terms was at the same level as it was at the start of 1790.
Given silver’s incredible 260% run-up throughout 2025, the current volatility presents a clear opportunity for option traders. The recent pullback from the highs has inflated option premiums, making strategies that sell volatility more attractive. We are looking at the Cboe Silver ETF Volatility Index (VXSLV), which has remained elevated above 40, reflecting continued market uncertainty.
For those holding long positions from last year, this is a prime environment to sell covered calls against their holdings. This strategy allows us to generate income from the high premiums while the price consolidates. It also offers a partial hedge against a further downturn in the coming weeks.
We must also respect the fact that silver has not yet surpassed its inflation-adjusted peak from 1980, which could serve as major resistance. We recall the sharp reversal that followed that historic high, leading to a prolonged bear market. With recent reports showing that the CPI for December 2025 cooled slightly to 4.5%, one of the primary tailwinds for last year’s rally could be losing strength.
The industrial demand picture also warrants caution, as it makes up over half of silver consumption. Recent manufacturing PMI data from the end of 2025 was mixed globally, failing to provide a strong signal of accelerating growth. This could leave silver vulnerable if investment demand begins to fade.
Considering these factors, traders should consider using derivatives to define their risk. Buying protective puts to hedge gains from 2025 is a prudent step for anyone with significant exposure. For those looking to position for more downside, bear call spreads offer a way to profit from a potential decline or sideways movement while capping risk.
