BY ANDREW GIOVINAZZI
April 28th, 2025
Yo Pit Crazies,
The most frustrating part of this sell-off has been the surprises. While some folks said they “called it”, I wasn’t one of them. I usually keep some SPY puts or VIX calls in my strategies just in case. But unfortunately I sold them off far too early – well before the ‘Liberation Day’ meltdown hit.
There’s still plenty of opportunity out there, and that’s what makes the U.S. stock market the best game in town. Every day brings something new. Today was no exception—the market opened strong, likely helped by the lack of fresh headlines from the White House, dipped during the session, and then rallied into the close.
1 Day SPY chart with 1 min candles
The S&P 500 Trust ETF (Ticker: SPY) dropped 1.5% before rebounding the same amount, giving us a 3% intraday range. The VIX held steady around the 25 level for another day. During class, I executed a day trade in the Weekly Profit Cycles strategy that delivered a quick 20% gain.
In class, I could have taken either a bullish or bearish position, but I went with a bullish setup on SPY. If you’re interested in learning how to set up daily ranges, take a look at this.
If stocks are not going down, then the IV is going down
Weekly Profit Cycles ran from 2:00 to 2:30 PM ET on Monday. Heading into the session, implied volatility (IV) was steadily climbing, and the May SPY options were attracting strong bids. However, that momentum faded, as shown by the red line below. During class, IV consistently declined.
Generally speaking the IV is the forward value traders get to sell. For example, they can sell options at the end of the day, picking up the time decay in the process, and selling options that drive down the IV. When IV stops rising, it often signals a potential opportunity to lean bullish on SPY. From there, I set up a two way trade and see what happens.
VIX has been dropping for 2 two weeks. SPY is doing the opposite.
Watching the monthly implied volatility by term—known as Sigma—is a great way to look for signals on which way to lean.
To Your Trading Success,
AG
Andrew Giovinazzi
30-Year Trading Pro
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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