BY ANDREW GIOVINAZZI
September 28th, 2025
Yo Pit Crazies,
AG’s alter-ego Vol Man here with my weekly analysis.
As usual, I’ll start with my last forecast…
(If some of my option volatility speak is vexing, the glossary is here.)
Last Week’s Big Call
The Week ending Sep 26th:
I expect VIX to drop because stocks aren’t moving much. However, Congress is disappointing the bond market. The concern is that Congress will drop the ball on the new continuing resolution. The Uniparty spent all spring and summer in a budget exercise that could leave the massive spending levels from the prior administration.
The only entity big enough to sink the U.S. equity market is the Federal Government. Into Friday’s close, additional market stress could give a good place to short the VIX this coming week. I think VIX tops 17 at least once this week, with the S&P 500 (SPY) dropping below 650. I don’t see new closing highs unless there’s a sensible budget resolution.
Weekly Wrap Up
I give myself an A- on the prognostication.
SPY spent the whole week dropping but only made 654 lows.
VIX traded above 17 for a moment and Congress is still intent on shutting down like there’s endless money to spend.
That brings me to the subject of chickens…
These little ladies are the Wyandots that I recently got from my sister-in-law.
These chickens are more useful than Congress. Congress continues to play chicken with the budget and, as I remember, we haven’t had a serious deficit reduction effort since the 1990’s.
Say what you want about Bill Clinton, he said yes a lot, but he’d also say no.
Right now, Congress needs to say no more spending.
Don’t count on it.
Obamacare mandates are driving insurance premiums to stratospheric heights. Ever since the U.S. got involved in health care and student loans, both have outpaced inflation by double digits.
Replace Congresspeople with chickens and AI bot Grok to balance the budget. Stocks will moonshot.
In other news, the Personal Consumption Expenditures (PCE) index came inline, and 2nd quarter GDP was revised up 0.5% to 3.8%.
Both are good for growth.
Remember, economic growth doesn’t mean inflation. Too much money supply is inflation. (Uncle Milton is happy to explain it).
If this kind of volatility is creating headaches, here is a solution. My new closing regime in Weekly Profit Cycles is going well,
Every Friday, The Options Insider Radio Network’s Vol Views offers bonus volatility insights with either Mark or myself; free of charge!
This Week’s Volatility Wrap-up
SPY daily price action in the last 30 days (with 1-day candles) &
Sigma (volatility per term) through 2026
Stocks spent all week selling off after a historic run. By Friday that selloff was over. Note: energy stocks are taking off this week. Companies that need to borrow money to grow should do well.
SIGMA volatility for October closed near a 30-day low. That is volatility in the most volatile month hitting a 30-day low as we roll into it. The potential event next week is keeping volatility higher.
SPX realized volatility snap on 09/26/2025.
The 10-day realized volatility (HV10) is still low, at 6.30%. This signals a continued bull market environment. Realized volatility typically pulls option premiums down. But not this year. We’re at a crazy low level of realized volatility relative to the VIX.
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 09/19/2025
Closing VIX cash and curve 09/26/2025
The VIX curve is still in a steep contango but got steeper into the close Friday. That’s generally a bearish VIX signal. Both October and November VIX futures closed the week lower. The most bearish VIX signal is a lower VIX future.
You can check out Volatility 101 basics on our Option Pit YouTube channel – now streaming.
OP VIX Zone Watch
VIX ZONE 1 9-13
VIX ZONE 2 13.01-17.99 ← We are here forever
VIX ZONE 3 18-23.99
VIX ZONE 4 24
We stayed in Zone 2 all week. This is normally a bearish VIX signal since we couldn’t hold new highs for the week in VIX. VIX did give the weekend up by the end of Friday.
VIX 30-day chart with 1 min candles
We had a couple of tickles for Zone 3, but it didn’t happen. The angst over GDP going big didn’t last the day, or even half a day.
VIX is still not falling as the SPY climbs, which doesn’t make me feel good.
The Big Call
What does Congress do? If they hold the line on spending, SPY goes to all-time highs in a hurry, and I would expect the high 14s for VIX. Some employment data could upset that, but job growth is still muted and the market expects that.
I will say, if Republicans surprise me and hold the line, we should see the SPY move over 667 next week.
To Your Trading Success,
AG