This was the most volatile week of 2025

BY ANDREW GIOVINAZZI

March 9, 2025

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

AG’s alter-ego Vol Man here with my weekly analysis. As usual, I will start with my last forecast…Keep ready for my surprise for next week!

Last Week’s Big call

Last Week ending Mar07:

Zone 4 will happen this week. SPX will make new lows. Rates will make new 2025 lows. The market has to shake 10 years of overactive Fed and USGov policy. That is going to take time and the fallout is usually violent. 5700 SPX will not surprise me. There are positive threads but we need to see more play out to get to 6000. $300 range in SPX is nuts but what I am going with.

Weekly Wrap up

I am giving myself an A+. Everything I predicted came to pass. Rates hit new lows for 2025, SPX made new lows and took out the entire election rally. We stayed in Zone 4 for a good chunk of the week. SPX even tried for 6000 for a few moments Monday morning before succumbing to the tariff, Ukraine, spending orgy narrative.

A bright spot was great earnings from Broadcom Inc (Ticker: AVGO). Semiconductor growth is alive and kicking but maybe some of the AI largess might get spread around besides the vampire Nvidia Corp (Ticker: NVDA). The Invesco QQQ Trust (Ticker: QQQ) slumped down 10% from the peak into correction territory.

The US Treasury Secretary made the rounds decrying years of USGov spending to promote growth that our tone deaf Congress has been all too ready to support. That only added to the woes on Thursday and Friday but the truth hurts.

Some geopolitical uncertainty crept in as the ECB claims it will spend $800 billion on defense. Where they are going to get the money is a mystery to the market and that sent bond yields jumping across Europe. Apparently few want a peaceful Ukraine settlement but this action helped add fuel to an already fiery market due to tariffs. We ended the week with a just ok jobs report as USGov hiring sunk to its lowest level in years.

The data made the market sad though with SPX breaking 5700 and Fed Chair Powell saying the actual economy was not too bad in prepared remarks.

Read on for what I think the Vol Runes are saying for this week.

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

SPX Sigma (volatility per term) for Mar, Apr, May

SPX had no good economic news to stand on, save AVGO earnings. Right now traders are not sure that tariffs are better for supporting the USgov than income tax but that is a debate for a later date. Too much news uncertainty caused the whole Trump Honeymoon bid to disappear. Same for the Tesla Inc (Ticker: TSLA). Stocks could not hold the week lows and there is something symbolic about having the election rally crushed to 0.

Short term IV finished lower on the day Friday and for the first time all week Mar Sigma vols did not make a higher low.This is the start of a bottom for SPX.

SPX realized volatility snap on Mar 07, 2024

Realized volatility for 10 days (HV10) is now 19.44%. The 60 day realized (HV60) is 14.99.

Average True Range (ATR) is sky high with some days 200 points or more SPX. Note that VIX near 24 is still pricey but we will need to see another week of this realized volatility to stay here.

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VIX Volatility Curves

Closing VIX curve, Mar 07, 2024

Closing VIX cash and curve, Feb 28, 2025

The VIX curve flipped the script as massive SPX moves, 6000 to 5700 pressed volatility higher and VIX into a real backwardation. The long term higher IVs are problematic since no solutions to any of the issues that caused the market to drop in the first place showed up. To be honest the mayhem is still in the VIX curve however we closed just outside of Zone 4 which usually means things should be slowing down.

Basic Vol 101 on our Option Pit YouTube channel

OP VIX Zone Watch

VIX ZONE 1 9-13

VIX ZONE 2 13.01 TO 17.99

VIX ZONE 3 18-23.99 We are here

VIX ZONE 4 24< We spent a lot of time here

VIX is in Zone 3 and spent most of the week in Zone 4 but could not take off. My cursory reading is the short term bottom for this vol cycle. Every attempt to get a full blown market rout was rebuffed.

VIX 30 day chart with 1 min candles,

VIX is in a higher plane. The drop at the end of the week in VIX was suspicious AS WAS THE KILLER SPX rally. VIX went to a new gear this week and there does not appear to be an end.

The Big Call

Zone 4 might get another sniff but I do not believe it will hold. The reality is the market was giddy about the new administration but traders realize any real change will be difficult. For the short term, Europe is going to pay for its defense, tariffs don’t seem to get worse and D.O.G.E. is still making progress. Trades now know that a slowdown is inevitable due to government spending. The question is how we get through it. At this point the price to pay for the withdrawals from the USGov spending addiction is pretty low. My guess is that SPX 5900/5700 is still in play but 100% of the endpoint will be the news cycle. VIX should break 20 if that is the range.