How I’m Using Silver’s Volatility to Target a 67% Discount

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Something remarkable happened in silver last week that I need to share with you.

The IV (implied volatility) rank in iShares Silver Trust (SLV) hit levels so extreme that traders piled into precious metals with the same intensity they usually reserve for SPDR S&P 500 ETF Trust (SPY).

When that kind of rush happens, most traders end up chasing momentum and buying calls near the top. But extreme volatility can offer far better opportunities than simply betting on continuation.

This is where the setup gets interesting.

The Ratio Spread Opportunity in High Volatility

When IV is inflated, premium becomes the most valuable part of the trade. Instead of paying up for calls like everyone else, I used the spike in volatility to structure a ratio spread by selling one put at the $40 strike and two puts at the $35 strike.

That brought in $1.55 of credit, which created multiple layers of edge in a market that was clearly overheating.

The beauty of a ratio spread in environments like this is that the structure naturally benefits from rich premium while still offering a controlled way to take advantage of any potential retracement. And if silver does cool off and chop around like I expect, the elevated volatility gives this trade room to decay quickly.

On top of that, if assignment happens, the cost basis becomes incredibly attractive. My effective ownership level would be $35.70 per share, a discount that most traders chasing the rally never come close to achieving.

From that level, a move back to recent highs would represent roughly a 200% gain on the shares alone. That is the type of asymmetric setup that only extreme IV can produce.

Why Silver’s Moves Demand Respect

Silver has a long history of explosive runs followed by deep retracements. It hit $50 in both 1979-1980 and 2011, and each time it suffered 80-90% pullbacks. When you understand that pattern, you become much more cautious about chasing strength after a parabolic move.

That is why I prefer to treat silver as a trading vehicle rather than a long-term hold. I have held it in the past, enjoyed the ride from $20 to $50 and collected plenty from the position, but its behavior just is not suited for steady compounding.

Gold fills that role much better in my portfolio. Silver, on the other hand, rewards a tactical approach — especially when volatility reaches extremes like we just saw.

My plan going forward is straightforward: Use high-IV conditions to sell premium through structures like ratio spreads, close positions early when they decay to 10-15 cents, and only accept assignment when it offers a meaningful discount that aligns with longer-term levels.

Markets love to oscillate between support and resistance and there is no need to chase the crowd when you can structure trades that take advantage of the volatility they create. Elevated IV is a gift when you know how to use it — and right now SLV is offering exactly that.

I’ll see you in the markets.

Chris Pulver
Chris Pulver Trading 

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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk. 

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We develop tools and strategies to the best of our ability, but no one can guarantee the future. There is always a risk of loss when trading. Past performance is not indicative of future results. The trades expressed are from an11-yearr backtest on 543 trades. The result was a 97.1% win rate, 17% average return (winners and losers) with an average hold time of 11 days. From 9/30/24 – 1/28/26, on 124 live trades, the win rate is 94%, 16% average return (winners and losers) with an average hold time of 12 days.