BY ANDREW GIOVINAZZI
October 5th, 2025
Yo Pit Crazies,
AG’s alter-ego, Vol Man, here with my weekly analysis.
As usual, I’ll start with my last forecast, cover last week’s market action and volatility levels, and end with my outlook for the next five days.
(If some of my option volatility speak is vexing, check out the glossary here.)
Last Week’s Big Call
The Week ending Oct 3:
What does Congress do? If they hold the line on spending, SPY goes to all-time highs in a hurry, and I would expect the high 14s for VIX. Some employment data could upset that, but job growth is still muted and the market expects that.
I will say, if Republicans surprise me and hold the line, we should see the SPY move over 667 next week.
Weekly Wrap Up
I give myself a C.
Stocks closed at an all-time high, but VIX didn’t budge. SPY at 670 is pretty sweet, though.
The big headline: we’re in Federal Shutdown mode and both sides are trolling each other.
At this point, politicians should look at the market, notice no one needs them, and cut spending to shore up the country’s finances. Stocks want less government spending.
The ADP private payroll number was negative for the 2nd month in a row as employers cut workers. There are still over seven million jobs available in the USA. I got my first taste of the Shutdown Blues since the BLS was out and there was no employment data Friday. That ADP number pretty much guarantees another rate cut.
This Week’s Volatility Wrap-up
SPY daily price action in the last 30 days & Sigma (volatility per term) through 2026
SIGMA volatility for October closed near a 30-day low but is now out of the VIX cycle. November volatility is still firm as traders keep Nov options prices high while waiting for an event without option sellers. It’s nearly impossible for VIX to crack with the Shutdown on.
SPX realized volatility snap on 10/03/2025.
The 10-day realized volatility (HV10) is still low at 6.37%. This signals we’re still in a bull market. Realized volatility typically pulls option premiums down. But not right now with the Shutdown. We’re at a crazy low level of realized volatility compared to VIX.
If all this volatility has you feeling nutty, consider a strategy that’s neutral and doesn’t rely on which way the market moves.
VIX Volatility Curves
Closing VIX curve 10/03/2025
Closing VIX cash and curve 09/26/2025
The VIX curve’s still in a steep contango but flattened a bit this week. There were October Monday Crash Vibes floating around into the close Friday. Oct and Nov contracts are higher. Again, the Shutdown dynamic for volatility.
You can check out Volatility 101 basics on our Option Pit YouTube channel – now streaming.
OP VIX Zone Watch
VIX ZONE 1 9-13
VIX ZONE 2 13.01-17.99 ← We’re here forever or until the Shutdown ends.
VIX ZONE 3 18-23.99
VIX ZONE 4 24
We stayed in Zone 2 all week. This is normally a bearish VIX signal since we couldn’t hold new highs for the week in VIX. VIX is on a multiday run of higher lows, again, consistent with the Shutdown Event Thesis.
VIX 30-day chart with 1 min candles
No Zone 3 touches and lots of stocks rallying this week. The only way to tell this is Event Pricing: VIX is 4 points higher than it should be with realized volatility this low. VIX still isn’t falling as SPY climbs, which doesn’t make me feel good. VIX is actually climbing.
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The Big Call
It’s all about Congress now.
President Trump has weathered 30+ day shutdowns and will do it again. Passing the budget with less spending is bullish, and cutting out the COVID spending spree will pay off for investors. SPY will keep making new highs, but slowly.
VIX won’t do anything until the shutdown’s over.
Even a Gaza peace deal couldn’t get VIX lower.
Republicans are holding the line and 670+ will happen.
If we get the budget deal done over the weekend, 680+ easy for SPY.
To Your Trading Success,
AG
