VIX is close to leaving the Danger Zone so what does this mean for stocks?

BY ANDREW GIOVINAZZI

April 25th, 2025

Yo Pit Crazies,


I joke about the Danger Zone with my co-hosts on the Vol Views show on the OI Radio Network.  Of course the joke is Mark Longo has to pay royalties to Kenny Loggins for use of the Danger Zone or his podcast gets kicked for copyright. So when he rolls it out, it’s a big deal since VIX is only in the Danger Zone 25% of the time. That should make for a lot of chart action which Licia Leslie can teach you here.

The other 75% of the time, the VIX is below 24 – but after a nutty month, that can be hard to remember. VIX ripped up to 60, only now to come crashing down to 25.51 as I’m writing this. It even dipped to 24.82, just to tickle the bottom of the Danger Zone.

 

Here is a 1 month VIX chart – it’s packed with action. But there’s also a trick.

Whether you’re new to trading or a seasoned pro, this is a trick you’ll want to know. It took me nearly five years to learn during my early days on the trading floor—and believe it or not, it still works.

 

If you want to know what the trick is, keep reading.

 

VIX can get back to 30 day lows

As of today, that means the VIX could dip just below 18. It doesn’t have to—but it can. That’s because the VIX reflects market sentiment and mindset. Traders were thinking a certain way and priced in volatility based on that. Once the event driving the volatility passes, the VIX can return to its previous low.

 

Two weeks ago, the market was looking at a 90-day wait on trade deals. Sure, stocks will react to headlines in the meantime, but the sub-18 VIX is the target. If those trade deals start coming through, the VIX will drop—and stock volatility will ease.

 

Don’t be surprised if the VIX dips into the low 20s next week. It’s already discounting the recent realized volatility in the S&P 500 Trust ETF (Ticker: SPY) by half. Option prices are moving down in a hurry – and that is usually good for stocks.

 

To Your Trading Success,

 

 AG

Andrew Giovinazzi

30-Year Trading Pro

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Andrew Giovinazzi

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About the Author

Andrew Giovinazzi

Andrew Giovinazzi

Former CBOE floor trader and CIO at Karman Line Capital. Author of ‘The Option Traders Hedge Fund’ with over 30 years of options trading experience.

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