🕒 Market Overview: Silver futures surge above $42, positioning for potential test of 1980 highs

🔄 Sector Insight: Precious metals outperforming as 150 million ounce supply deficit drives fundamentals

💰 Today's Trade Idea: Bull Call Spread on SLV targets upside with defined risk parameters

SMART TRADE IDEA

Bull Call Spread on SLV

Trade Setup: Buy $37 Call / Sell $43 Call, December 19, 2025, expiration

• Cost:  $1.50 ($150 per spread)

• Max Profit:  $4.50 ($450 per spread)

• Breakeven:    $38.50

Management Plan: Roll up, or take profits if SLV’s price reaches $44

Given the price action in the gold market, silver could be on the verge of a parabolic rally that challenges the 2011 and 1980 highs. The vertical bull call spread offers a favorable risk-reward profile for traders seeking to participate in a silver rally with limited risk. 

NOTE: Remember, options trading involves substantial risk and is not suitable for all investors. Consider your investment objectives, financial resources, and experience level before implementing this or any options strategy.

DISCLOSURE: Trade recommendations may have changed since publication. Evaluate current market prices and risk/reward before acting. Trading involves significant risk and is not suitable for everyone. This is not personalized investment advice. Past performance doesn't guarantee future results. Publisher and contributors may hold positions in recommended securities. Readers assume full responsibility for their trading decisions. Consult a financial professional before investing.

MARKET BREAKDOWN

Macro Lens – Big Picture Market Forces

Silver markets reflect broader precious metals strength as fundamental supply-demand imbalances intensify. The Silver Institute reports a 150 million ounce deficit for 2025, with demand reaching 1.20 billion ounces against supplies of 1.05 billion ounces. This structural shortage creates upward pressure on prices as investment demand accelerates.

COMEX silver futures open interest has expanded throughout 2025, validating the bullish trend as institutional participation increases. Rising open interest combined with higher prices indicates sustainable momentum rather than speculative froth. The quarterly chart shows silver breaking through multiple resistance levels, including the February 2021 high of $30.35 and the October 2012 peak of $35.445.

Sector and Stock Watch – Identifying Key Movers

Silver has outpaced gold's advance despite gold reaching consecutive record highs over eight quarters. This relative strength suggests silver may be entering a catch-up phase, particularly as the metal trades significantly below its 1980 and 2011 highs near $50 per ounce.

The SLV ETF has tracked silver futures performance closely, advancing 40.3% from April lows to current levels around $37 per share. With over $20 billion in assets under management and daily volume averaging 17.5 million shares, SLV provides liquid exposure to silver's price movement during U.S. market hours.

Trading Strategy in Focus – How to Play the Market

Current market conditions favor strategies that capture upside participation while managing downside risk. Silver's technical breakout above long-term resistance levels, combined with fundamental supply deficits, creates a setup for continued strength. The quarterly chart displays a bullish key reversal pattern, with price action breaking above critical resistance levels.

A vertical bull call spread structure allows traders to participate in potential upside while defining maximum risk exposure. This approach benefits from time decay on the short call while maintaining upside exposure through the long call position.

Silver’s rise over $42 per ounce has increased the odds of a challenge of the highs from 2011 and 1980 around $50 per ounce. 

The quarterly chart shows that COMEX silver futures rallied above long-term technical resistance levels in 2024 and 2025. Silver eclipsed the February 2021 high of $30.35 in May 2024. Silver surpassed the October 2012 high of $35.445 in March 2025. Silver futures have made higher lows and higher highs since reaching a bottom of $11.64 in March 2020. The current price is over three and a half times the 2020 low. 

In Q2 2025, silver futures formed a bullish key reversal pattern on the quarterly chart, as the price fell below the Q1 low and closed June above the Q1 high. The move above the $37.58 resistance has triggered a rally that could challenge the 2011 and 1980 respective highs of $49.82 and $50.36 per ounce. 

SLV is the leading and most liquid silver ETF product.

At $36.97 per share, SLV had over $20 billion in assets under management. SLV trades an average of nearly 17.5 million shares daily and charges a 0.50% management fee. SLV does an excellent job tracking silver futures. The most recent December contract silver futures rally took the price 51.9% higher from $27.845 on April 7 to a high of $42.29 on September 3, 2025. 

Over the same period, SLV moved 40.3% higher from $26.57 to $37.64 per share. SLV only trades during U.S. stock market hours. Since silver futures trade around the clock, the ETF can miss highs or lows in the silver market when the stock market is closed. 

A bullish call spread on SLV could offer upside potential with an attractive risk-reward dynamic. At $37 per share, the SLV $37-$43 vertical bull call spread for December 19, 2025, expiration at $1.50, has an attractive 1:3 risk-reward ratio. 

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