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Silver and Gold: When Protection Gets Too Expensive to Buy

by | Jan 9, 2026

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I was running through my trade scanner recently looking for positive gamma squeeze candidates when something in the silver options market stopped me cold…

The call skew was sitting at 101%.

That’s not just elevated — that’s absolutely insane. And it completely changes how I’m thinking about protecting positions in precious metals right now.

Here’s what’s happening and why it matters for anyone holding silver or gold exposure heading into what’s been an unexpected banner year for these assets.

The Protection Paradox Nobody Saw Coming

Let me break down what I’m seeing. Silver options are showing a 101% call skew, meaning call options are trading at massive premiums relative to puts. The practical impact?

Buying puts to protect your position is now approximately three to four times more expensive than it was earlier in the year. The market’s been going straight up — and protection has become brutally overpriced as a result.

It’s a paradox: The asset has already appreciated significantly, yet hedging becomes most expensive at the point where traders finally start wanting it. This creates a real challenge for anyone holding leveraged positions or trying to be disciplined with downside risk.

For leveraged traders, traditional put buying becomes cost-prohibitive. That’s where alternatives like butterfly spreads come in, allowing you to define your protection zone without paying inflated volatility premiums.

Another simple approach for unleveraged long-term holders is sticking with the trend and using any pullbacks as opportunities to average into strength rather than buying overpriced insurance.

Where Else This Shows Up and What a Gamma Squeeze Really Means

What’s interesting is that silver wasn’t alone. The same scan that pulled up the extreme skew also highlighted a handful of names showing strong positive gamma setups — Ford Motor (F), Freeport-McMoRan (FCX), the Russell 2000 (IWM), Peloton (PTON) and Wells Fargo (WFC).

These all looked positioned for potential upward pressure as options dealers hedge.

Here’s the quick explanation. A positive gamma squeeze happens when market makers are forced to buy stock as price rises due to their hedging exposure.

The higher the price goes, the more they have to buy — and that feedback loop can accelerate the move. In those environments, traders might consider ratio spreads or even well-positioned naked puts, since you want to take advantage of the directional push without paying up for expensive calls.

But to be clear, that doesn’t mean blindly chasing these setups. Positive gamma is a tool, not a signal. It tells you where the structural flows are likely to create an advantage, but you still need a controlled strategy to engage with it.

And that brings me back to precious metals. My campaign trades in silver and gold throughout 2025 were solid. I took a lot of profit on those positions as they ran.

But I’m still in them — and the way this skew is shaping up, I’m reallocating capital back toward metals in a more deliberate way. Instead of overpaying for protection, I’m managing risk through structure, patience and selective entries on dips.

Sometimes adapting isn’t about adding complexity — it’s about making smarter choices with the tools the market gives you.

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. 

P.S. 1 Strange Trade Would Have Doubled A Stake 31 Times in 2025 Alone…

And according to two former hedge fund traders, myself being one and Lance Ippolito the other…

This special option could present more opportunities in 2026.

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We develop strategies to the best of our ability, but we cannot guarantee a future return. There is always a risk of loss when trading. Past performance is not indicative of future results. The results shown are from a 237-trade backtest from 1/1/20 – 1/1/26. The result was a 70% win rate, 40% average return (winners and losers), with a 7-day hold time.

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