BY ANDREW GIOVINAZZI
June 11th, 2025
Yo Pit Crazies,
Treasury Secretary Scott Bissent was busy promoting the new China deal and highlighting recent progress. Meanwhile, China quietly imposed a six-month cap on rare earth exports—an apparent precaution in case trade tensions resurface. Naturally, this move adds significant credibility to Frank Gregory and the ‘Combat China’ portfolio we manage in Cap Gains.
Most of it was good news, and stocks rallied in response. But by 2 p.m., the market turned sharply lower after the State Department issued a warning for non-essential U.S. citizens to leave certain Middle East hotspots. That’s the kind of negative headline risk that can shift sentiment quickly. What’s actually happening on the ground?
Hard to say—but the market has already priced in the uncertainty.
VIX is running a very steep Contango
Note I have some numbers circled below:
>> 9 Day VIX is running 15.42
>> VIX is running 17.26 after breaking 16.25 today on the downside
>> VIX Jun future is 18.35
>> VIX Jul future is 20.10 after trading mid-19s today
The VIX futures premium is unusually high given the current VIX level, suggesting that volatility has recently come down from higher levels and that some latent volatility in the system. The July VIX future is trading hot—nearly $5.00 above the 9-day VIX cash, indicating persistent concern in the market.
Realized volatility has slowed to a crawl—less than 1% intraday today—but traders remain unconvinced. They want proof that headline risk can truly ease. As of now, the VIX is primed to spike quickly, with futures positioned to absorb any sudden move higher. This suggests that recent VIX pops are short-lived and largely reactive to headline-driven shocks.
If the headline proves to be just noise, the VIX should resume its gradual move back toward 16.
To Your Trading Success,
AG
Andrew Giovinazzi
30-Year Trading Pro
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