BY ANDREW GIOVINAZZI
May 19th, 2025
Yo Pit Crazies,
Imagine my surprise when Moody’s downgraded the U.S. debt rating, and the SPDR S&P 500 ETF (Ticker: SPY) opened down just 1%. 14 years ago, when I started with Mark and Option Pit, a move like that would have triggered a 5% drop — and often spiraled into a 15% decline. Not anymore.
Was the downgrade politically motivated? It’s a valid question. While it did pressure Congress into passing some spending cuts over the weekend, the measures still fall well short of what’s needed. The House proposal is a start, and I’m hopeful the Senate can build on it. I don’t like relying on hope — but markets move based on future expectations. And right now, it’s surprising to say, the Trump-era economic plan seems to be gaining traction.
Wondering if the rally will hold? Just follow the Zones, as always.
VIX has been stuck around 18 for 1 week
18 isn’t even a Zone — it’s stuck in no-man’s-land. We’re at a crossroads: either SPY settles into a lower-volatility rally, or it jumps back on the wild ride we saw in the first half of 2025. In my view, traders are waiting for Congress to pass a reasonable spending bill. Until that happens, SPY isn’t going anywhere.
The further VIX moves away from 18, the more likely SPY will trend in the opposite direction. If VIX climbs above 18, then pushes through 19 and 20, we could see SPY drop to 570. But if 18 holds as a ceiling, SPY may push back above 600 — surprisingly, as the Trump agenda appears to be gaining traction.
I don’t make rules, I just follow the Zones.
To Your Trading Success,
AG
Andrew Giovinazzi
30-Year Trading Pro
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