BY ANDREW GIOVINAZZI
July 14th, 2025
Yo Pit Crazies,
The Perpetual Tariff Season is here.
It’s a bit like earnings season—traders gear up for a major announcement, driving up option prices in anticipation of a significant move.
Hans, no stranger to earnings action, has been on fire lately—his MTI is lighting up the board.
Here’s a snapshot of the close:
The VIX surged above 17, while the SPX managed a “monumental” gain of just 0.14%.
Something about this picture doesn’t quite add up.
Let’s dig into what’s really going on.
You see, a 17 VIX means we should move at least 1% per day in SPX.
That’s about 6 points per day for the SPDR S&P 500 ETF (Ticker: SPY)—yet at best, we’re seeing moves of just 0.80. To add to that, SPY’s 30-day realized volatility has dropped below 10%. There’s a significant disconnect between implied expectations and actual market movement—serious premium is being priced in, but not delivered.
SPY 1 YEAR chart with 1 day candles and 30 day realized volatility
The only conclusion I can draw is that traders are treating the August 1 Trade Deadline like an earnings event. They keep bidding up options to match the move they anticipate, keeping premiums elevated. I used to do the same thing back when I was on the floor—it’s a way to keep pricing in potential volatility. That dynamic alone can push the VIX higher, even if the underlying market isn’t doing much.
Below are the big banks. If their earnings come in strong, brace for a rally into August 1—likely driven by a “long stocks, long VIX” setup.
That’s just how the market’s playing out—even if I’d prefer to see a little green on my SPY puts.
To Your Trading Success,
AG
