BY ANDREW GIOVINAZZI
July 9th, 2025
Hey there, Andrew here.
I was wrong about VIX but it’s finally paying off…
I figured there was no way SPY could rally that much without volatility dropping – and it was definitely a kick in the butt when I was wrong.
For three weeks, I’ve been sitting on VIX puts that wouldn’t turn green.
Today, VIX finally broke 16 for the first time in July, hitting 15.82. And you know what?
Today was the first day I’ve sold a VIX put for money in three weeks.
The Expensive Education I Just Got
Here’s what I miscalculated: I thought I had over-hedged because I owned so many VIX puts.
I figured if SPY rallied, volatility had to come down. Simple math, right? But the market taught me something about patience I won’t forget.
Look at this disconnect that’s been driving me crazy: realized volatility has been sitting at 8% while VIX stayed stubbornly around 16. I think that’s the cleanest mathematical edge I’ve seen in months, and for three weeks it felt like I was the idiot for believing it.
The math on this is so clean it almost seems wrong.
When you see that kind of separation between what volatility actually is versus what people are paying for protection, somebody’s getting it wrong.
I just didn’t think it would be me for this long.
What the Contango Curve Was Really Telling Us
I think the signal was there all along – I just didn’t trust it enough.
When you saw that beautiful separation in the volatility term structure, with September vol spreading way out from July and August, that was your bullish signal right there.
The VIX curve was screaming contango, but I kept second-guessing myself. Iran-Israel tensions, tariff uncertainty, Fed policy – there was always another reason for people to buy protection.
I think I got caught up in the noise instead of trusting the numbers.
But here’s what I learned: contango is always a strong bullish signal.
Always.
When you see that separation in volatility like we had, where future months are pricing in much higher vol than near-term, the market is telling you something important.
I think I just needed to be more patient with letting it play out.
Present Opportunities
Right now, I’m looking at VIX finally doing what it’s supposed to do – mean reverting. The opportunity is there to close out July positions and start thinking about August setups.
I’m running stops on my remaining July puts because I don’t want to give back what we’re finally making.
My goal is to have every VIX put in July closed by this Friday. Be happy with what we can get, you know?
To be honest, VIX historically spends 25% of its time at 13 or lower.
It hasn’t lately, but the math still works. That’s why I keep buying these puts – the risk-reward on a lot of them is very, very good when you’re patient enough to let mean reversion do its thing.
What This Means Going Forward
The crowd has been wrong about sustained volatility. While everyone was buying protection for crashes that aren’t coming, patient volatility sellers are finally getting paid.
NVIDIA hit $4 trillion and everyone did that thing where they look around and go “now what?” That pause you’re seeing?
That’s normal profit-taking behavior, not the start of some major correction. I think we’re riding a sine wave where we get close to the top, pull back a little, then continue the run.
The key is adjusting to what we have instead of fighting it. I think that’s been my biggest lesson these past three weeks.
The Action: Close July, Prepare for August
Here’s what I’m doing right now: My goal is to have every VIX put in July closed by this Friday. I’m looking for $2 on my 18 puts, but I’m running $1 stops because I don’t want to give back profits.
If VIX drops to 14 next week – which it certainly could – we’ll have some August positions ready. But I want to close more July before buying any more August.
The math finally makes sense again. Realized vol at 8%, VIX breaking 16, and contango doing what contango does. Sometimes the market teaches you patience the expensive way, but the lesson sticks.
— Andrew “Trust the Math” Giovinazzi
P.S. I think Mark’s onto something with this cash zone strategy he’s been trading. While I’m figuring out this VIX weirdness, he’s pulling consistent returns using options on just one stock. It’s actually pretty brilliant and I wish I came up with it myself. Anyways, if you haven’t seen this, check it out here.