Deutsche Bank has noted ongoing fluctuations in Silver prices, which have seen a dramatic increase since early 2025. Even though there has been a recent decline, Silver is still over 260% higher than it was at the beginning of the year. Right now, Silver’s price hasn’t exceeded its peak, adjusted for inflation, since 1980. Interestingly, on January 9th of this year, Silver, when adjusted for inflation, was valued similarly to its price back in 1790. With Silver’s impressive 260% rise throughout 2025, the current volatility creates a solid opportunity for options traders. The recent dip from the highs has increased option premiums, making strategies that take advantage of this volatility more appealing. The Cboe Silver ETF Volatility Index (VXSLV) has remained above 40, indicating ongoing market uncertainty. For those who have long positions from last year, this is an excellent time to sell covered calls against their holdings. This strategy allows for income generation from high premiums while the price stabilizes. It also acts as a partial hedge against a potential price drop in the coming weeks. However, we should be mindful of the fact that silver still hasn’t yet exceeded its inflation-adjusted peak from 1980, which may act as a significant resistance point. After that historic high, we saw a sharp reversal that led to a long bear market. Recent reports show that the Consumer Price Index (CPI) for December 2025 eased slightly to 4.5%, suggesting that one of the main drivers behind last year’s price rise could be weakening. The demand for silver in industries also raises some concerns, as it constitutes over half of silver consumption. Recent global manufacturing PMI data from late 2025 has been mixed, providing no strong indication of accelerating growth. This could make silver susceptible if investment demand starts to wane. Considering these factors, traders might want to use derivatives to manage their risk. Buying protective puts to secure gains from 2025 is a wise move for anyone heavily invested. For those anticipating more downside, bear call spreads can offer a way to profit from either a decline or sideways movement while limiting risk.

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