Yo Pit Crazies,
AG's alter-ego Vol Man here with my weekly analysis. As usual, I start with my last forecast.
If my Option Volatility Jargon is vexing, tap our Glossary here.
Last Week’s Big call for Aug 14
“Mag 7 earnings and revenue killed the Lag 7. Free Cash Flow will come back is the going narrative now for the Mag 7 so watch for that info. Traders await a SOH deal from Iran or it might be back to the mattresses. That would get SPY back to 760 or lower since Mag 7 earnings are now back in the drivers seat. Keep an eye out for SPCX like a phoenix next week as it defies the lock ups. SPY will moon to 785 or higher on deal in Iran and VIX will see 13.”
Actually SPY did not do a lot either way. There was no Iran Deal but VIX kept heading toward 14 all week.
The Weekly Wrap Up
CPI and PPI came in line and most of the other data was good. Nothing out of Iran and almost no tweets. The relative quiet means we might get a surprise this weekend. What did pop up on the radar was interest rates and how high they are going.
The big thing coming out of this week is that the AI race is going to need big bucks and Wall Street and Nvidia Inc (NVDA) were only too happy to come up with novel ways to finance the $500 Billion Dollar spend on top of the commitments already out there. I think that is putting a real floor under rates as capital becomes scarce and more expensive.
If TLT makes a new yearly low next week, it goes on my radar as the thing to watch. Bond prices are in the tank and there is massive demand for capital from the USGOV and High Tech.
No idea how it turns out.
Mini Rant
Congress is totally derelict in its duty to protect America with the unreal spending. Somehow every “crisis” becomes a new reason to shell out more borrowed dollars to citizens and businesses and it has to end or it will end like Greece. On the crazy side, Democratic Socialists (DSA) are winning elections because people think sitting on their couch and looking at their phones is the same thing as having a job.
(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 one-day candles. SPY Sigma (volatility per term) for Aug, Sep, Oct
SPY mostly held the line on the good inflation numbers getting near $780 at one point. There was not much else to move that macro needle except massive tech spending.
Sigma vol collapsed in the short term leaving most of the volatility indicators and 1 year lows. We got single digit short term IV for the first time in 8 months.
SPX Realized Volatility snap on Aug 14 2026
Here's what realized volatility means: It measures how much a stock actually moved over a specific time period. Think of it like checking your car's odometer after a road trip.
The odometer tells you how far you actually traveled, not how far you planned to go. High realized volatility means big price swings. When SPY has high realized volatility, the market is unstable and prone to sharp drops.
Realized volatility lost the big rally as SPY put in a more benign $5 range week to week. 20 volatility last week and a 5 this week.
VIX Volatility Curves
Closing VIX cash and curve Aug 07
Closing Curve Aug 14
The VIX curve is in contango with a lower VIX base, 30 day low, and very steep contango. Conflict or not, the market things we are getting past the Strait of Hormuz. Very low short term volatility produces a very steep VIX curve and a very low short term volatility expectation.
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OP VIX Zone Watch
VIX ZONE 1 9-13
VIX ZONE 2 13.01-17.99 We lived here
VIX ZONE 3 18-23.99
VIX ZONE 4 24+
VIX stayed slowly dropping in Zone 2 from the beginning of the week and really never stopped. The Aug VIX future finally start to give up the ghost getting to sub-16.
VIX 30-day chart with one-minute candles
VIX closed on the lows of the week with an absence of tweets and mostly good news. It was about as straight a line down as VIX could go with two big headline events.
The Big Call
I am thinking of a drift to $780 SPY with very little downside action. The relatively quiet Pres Trump makes me think we get an announcement on Iran. In the meantime, get ready for the 13 handle in VIX next week. The only issue is how the market deals with rates winding hire? Actually we should ask how Congress plans to fund its fantasy budget with higher rates.
To Your Trading Success,
Andrew