‘Normalcy has returned’ to metal trade as gold recoups from sell-off

Yahoo Finance Video and Josh Lipton

Thu, February 12, 2026 at 10:00 PM GMT+9

In this video:

SLV

+4.29%

GLD

+1.13%

As gold (GC=F) and silver prices (SI=F) slowly recuperate from the precious metals’ sell-off from record highs, BayCrest managing director of equity derivatives David Boole outlines how investors could find options trading opportunities within the metal trade.

To watch more expert insights and analysis on the latest market action, check out more Market Domination.

Video Transcript

00:00 Josh

So normalcy is seemingly making its way back into the metals trade, bringing an opportunity for options traders to lean into gold and silver. We’re taking a closer look now with the options pit sponsored by Tasty Trade, Bay Crest, Managing Director of Equity Derivatives, David Bull joins us now to discuss. David, great to see you, as always.

00:27 Josh

Start here. Uh as I was reading through your notes, David, and and you mentioned this, we we saw that rout in precious metals late last month. You say that was a kind of a you call it a mini panic, Dave, you say. That’s what we saw there. Explain us what happened there. In simple terms, what was that mini panic all about?

00:44 David Bull

Yeah, I would even uh I would even go as far as to say it was a it was a real panic. Uh it was I focus on US equities mostly, options on US equities and the risk cascaded from this relatively small corner of of the cross-asset world, silver. and even inside of silver, this at that time, this $5 billion uh ETF, the AGQ was rebalancing midday. And so that combined with some zero day till expiry options in SLV uh perked up my interest and implied volatility spiked. It showed the panic in

01:21 David Bull

the SLV options. And when this was the day that silver was down 40% on the day. And usually when silver goes down, the cost of options goes down. And it hit a critical mass in about midday, right when this uh double lever ETF needed to rebalance and it sent it sent the S&P 500 lower on the day. So it was like this small $5 billion double lever like lever ETF was the tail wagging the dog of even things like the S&P 500. Um the technicals were super fascinating, but now normalcy has returned. Um it is not the asset that’s that’s driving global markets right now.

01:53 Josh

When you say that, David, normalcy has returned. So if I own the GLD, the SLV, what is that mean exactly, Dave? Layman’s terms, normalcy.

02:05 David Bull

So these are still high volatile assets. So in in GLD, if you own go- if you own gold, a 1 to 2 to 3% move every day is normal. If you own silver, SLV ETF, uh 4 to 6 to 7% is even normal. So some days silver will be up 5% and you’ll see a lot of headlines come across. That’s a normal move. That’s what the options market is expecting. And because we’ve gotten back to that regime, it has allowed the cost of options to come back down. And uh I’ve seen traders reload on upside bets in both GLD and silver uh because this price of the options has come down.

02:49 Josh

So let’s say, David, all right, I I’m I’m going to make a bet here. I think gold’s moving higher. Walk me through the, you know, the a simple, smart trade for that. And and also the risks I need to think about.

03:00 David Bull

So, say gold and silver have similar, they trade similarly in terms of the how the options are priced. Unlike equities, where usually the ca- crash risk is going lower, it gaps equities usually gap down and grind higher. These metals are the opposite, where geo- geopolitical events will could send gold gapping higher. And usually the lower move is a grind. So calls are typically priced higher than puts in both gold and silver. So the popular trade in GLD that has been the popular trade for months, if you want to bet on an upside move, is to buy call spreads. And typically we see very large call spreads moved around as the price of GLD moves around. And I think that’s a smart trade. Um and that’s just to limit the amount of money at risk. If you buy a call outright, you have more money at risk. If you buy a call spread, you have less money at risk. So that’s a that’s a popular trade. Same in silver, I would think about straight call spreads, but interestingly, I have seen traders look at outright calls in silver out out in the summer and even later today, there’s been some calls bought out to next January. And in gold, same thing. Usually we see call spreads, but I’ve seen some outright calls being bought. So I would think about call simple call spreads in both of those to bet on the upside.

04:22 Josh

Are there broader lessons, Dave? Like you look at gold and silver, broader lessons you take uh for the macro environment? Does does it suggest anything to us, Dave, about, you know, broader risk appetite, for example?

04:41 David Bull

I I I think so. It was pretty clear on January 30th when silver was down 40% and the price, like I said, the price of implied volatility in options mar- in the S&P 500 options market exploded. And you could see that in terms of the liquidity, even like the depth of book in S&P 500 futures shrunk. You could see risk cascading across. So to me, the takeaway is to be even if you’re not an investor in silver and gold and Bitcoin, Bitcoin was then took the title as the cross asset risk that was driving equities for the last five days or so, and then now equities is seemingly decoupled from Bitcoin as well and equities seem fine to go higher even as Bitcoin goes lower. But my point is to keep to keep an eye on these cross risk uh cross-asset risk indicators, even if you’re not a specialist trading these instruments, they’re important to keep an eye on.

05:43 Josh

Dave, as always, so great to have you on the show. Thank you.

05:47 David Bull

Thanks, Josh.

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