BY ANDREW GIOVINAZZI
February 16, 2025
Yo Pit Crazies,
Soon this letter will morph into Andrew’s Market Action. An almost daily report of the trading activity and the “dirt under the fingernails” of market action. For the trading I do, activity one day sets up the action for a trade the next day. I am a reactive trader. Essentially the market makes a move, creates an opportunity and I trade it if the edge is there.
The analogy I use with students is the rubberband is stretching and we do well riding the snap back. Volatility is the “tell” the market provides traders. Right now the VIX curve is giving us a signal. That curve is below. VIX is the 30 day ATM volatility for the SPX based on the IVs in the SPX options. Those future volatilities, yellow curve, are way above VIX cash.
VIX 9 DAY is trending lower, but long term VIX is not dropping
The 3 day weekend is upon us so traders mark down option prices getting ready for the time decay. This shows up as a lower shorter term IV like VIX9D. That is fine but what is not dropping is the March future and beyond. The market is saying higher volatility for longer.
That means more of the same action like we have had for the previous few weeks. High orbiting S&P 500 Trust ETF(Ticker: SPY) with large intraday moves but stocks are not really going anywhere. That is what I will trade for Tuesday and the balance of the week.
I will take the move when I get it. This should generate opportunities for Hans this week.
To Your Trading Success,
AG
Andrew Giovinazzi
30-Year Trading Pro
See what's hot at option pit
CAPITOL GAINS: SMR Aug16 7 call closed for a 150% gain
DELTA STRIKE: VLY Mar15 8 puts closed for a 88% gain
PFE May17 26 calls closed for a 66% win
OP MENTORING: SPY Mar22/19 510 put calendars and 520 calls for 6.4% gain
OPTION SHOPPER: ERX Mar28 65 calls closed for a 90% gain
