BY ANDREW GIOVINAZZI
July 20th, 2025
Yo Pit Crazies,
If some of my Option Volatility Jargon is vexing, our Glossary is here.
AG’s alter-ego Vol Man here with my weekly analysis. As usual, I will start with my last forecast…
Last Week’s Big call
Last Week ending Jul18:
The key question now is: do we see any movement in the absence of major news? With earnings season kicking off next week, any upside surprises could push markets to new highs. Remember how cautious companies were in Q2? That caution is baked into pricing and if they have 3 months of clarity now, stocks could go much higher. SPY at 635 is possible next week, especially if the banks set a positive tone. Meanwhile, the VIX might dip into the low 15s.
Weekly Wrap up
I’d give myself a C. SPY touched $629 but couldn’t hold much more than that. Even with limited movement in SPY, the VIX only managed to reach the mid-16s.
Looking ahead, earnings are the next major catalyst. In the meantime, we have the FOMC meeting on July 29 and a key moment on August 1 when trade policy clarity is expected. The market is waiting to see whether we kick the can down the road or move forward with 15% tariffs—that uncertainty is keeping volatility from breaking lower.
I don’t expect the Fed to cut rates. Inflation remains sticky, and Congress spends too much money. If Congress wants lower interest rates, it needs to rein in spending.
Earnings so far have been mixed—decent, but nothing spectacular. Banks are performing well, but Netflix Inc (Ticker: NFLX) disappointed on growth. Market reactions have generally been muted, but the real test comes in the next few weeks with the heavyweights reporting. Here are some of the key names to watch next week:
For further insights on Big Tech Mania, check out Hans’s analysis here.
If this kind of volatility is creating headaches, here is a solution.
Every Friday, The Options Insider Radio Network’s Vol Views offers bonus volatility insights with either Mark or myself—free of charge!
SPY daily price action over the last 30 days with 1 day candles
SPY Sigma (volatility per term) for Jul, Aug, Sep
I had one real opportunity to close SPY put spreads while the VIX averaged near 17 throughout the week—a level of sustained volatility that’s unusual and reflects the event pricing going into August 1. Overall, the news and earnings have been decent, and both traders and investors seem generally satisfied.
SIGMA volatility remains steady for August and September. July looks choppy, mostly due to expiration dynamics—aside from the brief spike when Trump floated the idea of firing Powell. That suggestion got a swift and clear response.
SPX realized volatility snap on Jul 18 2024
10-day realized volatility (HV10) is holding at 8.02%, signaling a low-volatility bull market—though you wouldn’t know it with the VIX still hovering above 16%. I said the same thing last week, and nothing’s changed. August VIX futures remain above 19, implying an 11.25-point premium over realized vol. That’s an unusually high pricing disconnect.
If all this volatility has you feeling nutty, consider a strategy that’s directionally neutral and doesn’t rely on which way the market moves.
VIX Volatility Curves
Closing VIX curve, Jul 10, 2024
Closing VIX cash and curve, Jul 18, 2025
The VIX curve remains in steep contango, with August VIX futures up 0.09 from last week. Despite SPY trading flat all week, volatility pricing continues to climb. Traders are clearly focused on the August 1 event, driving up premiums in anticipation.
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OP VIX Zone Watch
VIX ZONE 1: 9-13
VIX ZONE 2: 13.01 to 17.99 ← We are here
VIX ZONE 3: 18-23.99 ← We touched here
VIX ZONE 4: 24
The VIX remained in Zone 2 throughout the week. Stocks briefly rallied but quickly retreated back into Zone 2 territory following the ‘Powell Bomb.’ Overall, market behavior wasn’t much different from last week.
VIX 30 day chart with 1 min candles
The VIX remains near its lows, pricing in an $18 move in SPY over the next 30 days. Despite SPY’s realized volatility sitting in the single digits, the VIX refuses to break lower.
The Big Call
It’s shaping up to be another Groundhog Day-type week, with traders in a holding pattern ahead of the August 1 ‘Tariff Day’ news. This likely keeps the VIX anchored around current levels and SPY trading within a tight 10-point range. Strong earnings could push SPY back toward 630, but I doubt it will hold. Expect the VIX to hover near 17.
To Your Trading Success,
AG
