BY ANDREW GIOVINAZZI
July 7th, 2025
Yo Pit Crazies,
This Fourth of July weekend, we got the Big Turkey—our Big Beautiful Bill passed. At the same time, the Epstein list mysteriously vanished, much like Epstein himself. The timing of these two events feels a little too convenient… makes me want to break out the tinfoil hat and start asking questions.
I tend to rely on price action as the most reliable indicator, and today, stocks were down. After an impressive 35-point rally in the SPDR S&P 500 ETF (Ticker: SPY), a pullback seemed inevitable. Still, it’s clear the newly passed bill didn’t inspire much confidence in the markets. It came across as more of the usual Washington D.C. drive—spending heavily on things we arguably don’t need. So much for the spending cuts Republicans were elected to deliver.
This kind of market action definitely benefits 0DTE trading—take a look at this.
But there’s something even more intriguing unfolding. President Trump is shifting tariff dates with the sleight of hand of a New York street hustler running a game of 3-card Monte.
Traders were ready for this. Here’s what they did.
Traders have been bidding up VIX for the entire SPY rally
Realized volatility is at its lowest level of the year. The war in the Middle East? Over. The Big Beautiful Bill? Passed. And now, the summer trading doldrums are in full swing.
It’s clear from the chart below that volatility keeps pushing toward new lows, taking every opportunity to drop. But ever since the shock from April’s Liberation Day, traders have been gradually pricing up at-the-money options for two consecutive weeks—even as the VIX has remained mostly flat following the end of the Middle East conflict.
VIX 30 day chart with recent lows
I still believe a VIX spike is inevitable. However, President Trump continues to shift the timeline—moving the ‘shells’ around on tariff compliance dates. If the U.S. government had a $2 trillion budget, we could reasonably offset a significant portion of costs through tariffs and taxes, much like other countries do. But with the Big Beautiful Bill locking in a budget nearly three times that size, that possibility is off the table.
Barring a new Tariff Proclamation, I expect two more days of market malaise. Until then, SPY is likely to remain in the red.
To Your Trading Success,
AG
