BY ANDREW GIOVINAZZI
June 25th, 2025
Yo Pit Crazies,
Stocks are trying to get to all time highs. Go on Fintwit and all the Dem Pundits say we are inches from a recession. All the Repub Pundits say we are inches from explosive growth.
The truth is somewhere in the middle.
Readers of this blog know I think the Republican leadership is throwing away a grand chance to reduce spending back to pre-COVID levels and break a 25 year trend.
30 day chart of TLT rally, traders are cool with rates
Traders were hanging on this for a while but not so much anymore. Heck, even Cisco Inc (Ticker: CSCO) that I am running a 30% gain in for Flash 5 is making a 20 year high after the Dotcom crash.
AI is the ship that will lift all boats and ultimately that is what makes stocks move higher. US Gov mostly just gets in the way with misguided policy it has to fix later.
The best thing Uncle Sam can do is provide liquidity at reasonable rates to banks with huge balance sheets when things get sticky – again, mostly as a result of misguided government policy.
That also explains the situation we are in.
The Chasm between VIX Jul Futures and Realized Vol in SPX is Crazy Wide
The difference between OTM puts in SPX to the ATM puts for 3 month options is near an all time high. Traders are paying up for long term protection and they don’t want to sell it.
Why? Because they like their long equities better.
Realized volatility in SPY is near lows for the year – which is the opposite of what’s happening with 3m skew.
While the 60 day realized volatility average is high (see below), it’s still sampling the madness of Liberation Day.
That is creating an air pocket below the current VIX level that is apt to pop on any favorable news.
It also might be one of the best VIX shorting opportunities of the year.
To Your Trading Success,
AG
Andrew Giovinazzi
30-Year Trading Pro
See what's hot at option pit
CAPITOL GAINS: SMR Aug16 7 call closed for a 150% gain
DELTA STRIKE: VLY Mar15 8 puts closed for a 88% gain
PFE May17 26 calls closed for a 66% win
OP MENTORING: SPY Mar22/19 510 put calendars and 520 calls for 6.4% gain
OPTION SHOPPER: ERX Mar28 65 calls closed for a 90% gain