First Majestic Silver Plummets 9.1%: What's Behind the Sudden Downturn?

Summary
• First Majestic Silver (AG) trades at $17.015, down 9.1% from its $18.72 previous close
• Intraday range of $16.78 to $17.99 highlights sharp volatility
• $350M convertible notes and Del Toro mine sale dominate recent news

First Majestic Silver’s stock has plunged nearly 9% in a single trading session, raising urgent questions about the catalysts behind this dramatic move. The stock’s sharp decline coincides with recent strategic announcements, including a $350M convertible debt offering and the sale of its Del Toro Silver Mine. With a 52-week high of $18.73 and a 52-week low of $5.09, the stock’s current trajectory suggests heightened investor caution. This analysis unpacks the technical and fundamental drivers of the move, while identifying actionable options and ETF strategies for navigating the volatility.

Convertible Notes and Mine Sale Spark Investor Caution
First Majestic’s 9.1% intraday drop reflects investor skepticism toward its recent $350M convertible senior notes offering and the Del Toro mine divestiture. While the financing provides liquidity, the convertible structure introduces potential dilution risks, particularly if the stock rallies. The mine sale, while strategic, raises concerns about operational simplification at the expense of long-term growth. Elevated implied volatility in options (72.78%–78.44%) and a dynamic PE of 76.64 suggest market participants are pricing in both near-term execution risks and structural uncertainties in the company’s Mexican-focused operations.

Silver Sector Volatility as Pan American Silver Follows AG's Slide
The broader silver sector is under pressure, with Pan American Silver (PAAS) down 7.28% on the session. First Majestic’s 9.1% decline outpaces peers but aligns with sector-wide jitters over metal prices and financing risks. The sector’s beta to gold and silver prices remains a dominant factor, with AG’s concentrated Mexican exposure amplifying sensitivity to regional operational risks. While PAAS’s larger scale offers some stability, AG’s smaller market cap and higher leverage make it more susceptible to short-term sentiment shifts.

Bearish Options and ETF Positioning in a Volatile Environment
• RSI: 69.2 (overbought)
• MACD: 0.87 (bullish divergence)
• 200D MA: $9.99 (far below current price)
• Bollinger Bands: $14.74–$18.41 (current price near lower band)

Technical indicators suggest a short-term bearish bias, with the 200D MA acting as a critical support level. The stock’s 76.64 dynamic PE and 2.27% turnover rate highlight valuation risks. For options, two contracts stand out:

• AG20260116P15 (Put, $15 strike, Jan 16 expiry):
- IV: 75.92% (high volatility)
- Leverage: 94.44% (moderate)
- Delta: -0.1428 (moderate sensitivity)
- Theta: -0.0135 (slow time decay)
- Gamma: 0.1056 (high sensitivity to price moves)
- Turnover: 6,316 (liquid)
- Payoff at 5% downside: $2.015 (max(0, 17.0150.95 - 15))
- Why: High gamma and IV make this put ideal for capitalizing on a sharp decline.

• AG20260116P16.5 (Put, $16.5 strike, Jan 16 expiry):
- IV: 78.27% (very high)
- Leverage: 26.98% (moderate)
- Delta: -0.3806 (strong sensitivity)
- Theta: -0.01296 (slow decay)
- Gamma: 0.1729 (very high)
- Turnover: 1,436 (liquid)
- Payoff at 5% downside: $0.515 (max(0, 17.0150.95 - 16.5))
- Why: High gamma and IV position this as a high-reward bet on a moderate decline.

Aggressive bears should prioritize AG20260116P15 for its liquidity and gamma exposure. If the stock breaks below $16.50, AG20260116P16.5 offers amplified downside leverage.

Backtest First Majestic Stock Performance
After experiencing a -9% intraday plunge from 2022 to the present, AG has shown a generally positive performance. The backtest data reveals that the 3-day win rate is 48.73%, the 10-day win rate is 49.51%, and the 30-day win rate is 53.41%, indicating that AG tends to recover and even surpass its previous levels in the short term. The maximum return during the backtest period was 7.88% over 30 days, suggesting that while there is some volatility, AG has the potential for reasonable gains in the aftermath of a significant downturn.

Critical Support Levels and Sector Cues to Watch
First Majestic’s 9.1% drop underscores near-term execution risks around its convertible notes and mine sale. The 200D MA at $9.99 and 52-week low of $5.09 are critical thresholds to monitor. A breakdown below $16.50 could trigger a cascade of puts, while a rebound above $17.99 (intraday high) may signal short-covering. Investors should also track Pan American Silver (PAAS, -7.28%) as a sector barometer. For now, bearish options and short-term puts offer the most compelling risk/reward profile. Watch for a decisive move below $16.50 or a reversal above $17.99 to define the next phase.