BY ANDREW GIOVINAZZI
July 21st, 2025
Yo Pit Crazies,
While Hans is out there slinging Turbo Trades as stocks rip to new all-time highs, my beloved Volatility Products are finally starting to stir again. Yeah, they had some big moves back in March, April, and May—but things have gone quiet as we await Liberation Day 2.1 in early August. Historically, strong equity rallies tend to come with lower volatility, and we’re seeing that dynamic play out now.
One key reason is that stocks are moving more independently—it’s no longer a case of everything getting dumped like the baby with the bathwater. The truth is, most stocks don’t move much without a specific catalyst. Sure, in a full-blown economic Armageddon, they all tank together. But something like the rise of AI impacts companies in very different ways. That kind of selective movement dampens overall volatility and keeps the VIX in check.
It should affect volatility in a certain way and another shot at my VIX Bomb Trade of the year.
It should have a meaningful impact on volatility—and set up another shot at my VIX Bomb Trade of the Year.
Option Prices are setting up very low relative to where VIX is trading
One of the main reasons VIX puts are so cheap right now is because VIX futures are trading well above the spot VIX index. All the VIX Aug 20 options are priced off the Aug 20 VIX future, which is holding up until at least August 1st. The higher that future trades, the further out-of-the-money those puts appear—making them cheaper.
We’ll likely get another opportunity to buy VIX puts heading into August 1st. If VIX drops to 15 by August expiration, I project the iShares Barclays S&P 500 VIX Futures ETN (Ticker: VXX) could be trading around $35.
That’s what I’m aiming for.
To Your Trading Success,
AG
