Yo Pit Crazies,

If my Option Volatility Jargon is vexing, check our Glossary here.

AG’s alter-ego Vol Man here with my weekly analysis. As usual, I start with my last forecast…

Last Week’s Big call

“I expected SPY to test 660 or lower with VIX closing near 20 on Friday the 14th. The holidays are coming and 20 VIX is high for what traders call a Santa Rally – when investors push stocks higher into year-end. Traders want another selloff, and they’ll get it. VIX will drop to the 18s by the end of the week.”

Weekly Wrap up

I nailed it. Stocks tested and broke through 660 SPY. I said traders want another selloff – they got two. VIX hit Zone 4 and traded 19.5 early Thursday, so the low end came into sight. I give myself a B+ since the 20 VIX signaled what was coming. VIX closing below 24 will signal what’s next this week.

The story for this week’s weakness stems from Bitcoin and mechanical selling. Here’s how it works: When you pay cash for something, you sell when you want. When you use leverage (borrowed money), someone else can force you to sell. That forces you to raise cash fast by selling your winners – like stocks up 50% for the year. That’s what happened this week.

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September jobs looked okay, but we won’t get October numbers since nobody collected them during the shutdown. Yet all USGov employees get back pay. If the Shutdown proved anything, we can run the Federal Government with 80% fewer people. The volatility made the Fed change its tune by Friday morning and now we’ll get the 3rd rate cut.

NVIDIA Inc. (NVDA) posted huge earnings. The stock jumped briefly, then the selling started. Demand for AI chips stays strong but traders worry it will end. That happens in every tech revolution. The issue with revolutions? We don’t know how or when they end.

Every Friday, The Options Insider Radio Network’s Vol Views offers bonus volatility insights with either Mark or myself – no charge!

SPY daily price action over the last 30 days with 1 day candles

SPY Sigma (volatility per term) for Nov, Dec, Jan

Stocks rallied Thursday morning because the AI Tech revolution continues. Everyone changed their minds by 10:30 am ET. The Santa Rally wants to happen but gets derailed too easily.

SIGMA volatility stays very high and dropped only slightly. A 25-point daily move in SPY does that. A 15-point move the next day keeps it elevated.

SPX realized volatility snap on Nov 21 2025

Here’s what realized volatility means: It measures how much a stock actually moved over a specific time period. High realized volatility means big price swings. When SPY has high realized volatility, it tells us the market is unstable and prone to sharp drops.

10-day realized volatility (HV10) holds at 15.55% and picks up steam. This was the most volatile week in a month and the last 30 days sit firmly around 15%. That’s not bullish for SPY. Realized volatility runs high because SPY sells off easily now. This is not the same market we saw this summer.

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VIX Volatility Curves

Closing VIX curve, Nov 21, 2025

Closing VIX cash and curve, Nov 14, 2025

The VIX curve runs higher and flat – an ugly setup. The curve sends conflicting signals right now, making predictions harder. The futures curve sits in contango (short-term VIX trades below long-term), which means short-term VIX will drop. VIX cash trades above the futures, which signals more market volatility ahead. 

Here’s what that means: Traders want the Santa Rally and expect stocks to move higher. But they know the path will be bumpy.

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OP VIX Zone Watch

VIX ZONE 1    9-13            

VIX ZONE 2    13.01-17.99     <- We started here

VIX ZONE 3    18-23.99         <- We ended here

VIX ZONE 4    24+                <- We hit here

Three zones in one week and SPY dropped 1.5% from Monday’s open. VIX closed way higher than where it started the week – that’s bullish for VIX, bearish for SPY. The story stays the same: On rallies, VIX collapses fast. But it reignites in a heartbeat when selling starts.

VIX 30 day chart with 1 min candles

VIX spent most of the week climbing higher. Going up is going up. But it didn’t close at the highs. This signals more volatility ahead.

The Big Call

SPY will test 650 or lower this week but won’t keep dropping. Why? Selloffs hit fast but stocks bounce because the AI dream still drives the market and it’s not over. At some point NVDA will face more competition but that day hasn’t arrived. If the Fed gets their messaging together, we rally on Thanksgiving week. But we won’t see the 14 lows from last year. VIX will hit 19 again and SPY will top at 670.

To Your Trading Success,

AG