I think the VIX curve is basically taking a poll right now

Andrew Giovinazzi

BY ANDREW GIOVINAZZI

June 23rd, 2025

Hey there, Andrew here.

So if I wasn’t mistaken, I could have sworn something happened this weekend, right?

Look, I think everyone’s running around trying to figure out what this Iran thing means for their portfolios.

But here’s what I learned when I was 23 years old trading in the pit – traders basically charge for uncertainty, okay? The less you know, the more you charge for something. And you keep raising prices until somebody sells it to you.

Right now? The market just gave us the answer, and nobody’s paying attention.

The VIX Curve Is Basically Taking a Poll

So I polled traders in the RipZone room this morning – about a hundred people.

I asked them: after this bombing, do you think there’s more uncertainty or less uncertainty? You know what we got? 50/50. Dead split.

And you know what’s crazy? That’s exactly what the VIX curve is telling us right now.

We have a relatively flat curve. It’s drifting into contango, but there’s only one point between the back month and the front month. The curve is still very tight. Does that make sense?

Here’s what I think people don’t understand about volatility – anytime an event has happened, by definition there’s less uncertainty, right? Because now that event is done.

The market had bid up volatility going into this thing, but the volatility curve is not yet convinced that this is over.

So we’re taking the vol down a little bit, but the curve being flat? The sentiment is still – we could pitch either way.

This Is What Your Curve Shape Is Actually Telling You

I always try to tell people – your curve shape is market sentiment, okay?

VIX is telling you how much the market is moving, but the curve shape is the actual sentiment. Because the curve shape is giving you sentiment about what’s happening next. Isn’t that kind of cool?

So if we dropped into a very deep contango after this event, what would that tell you? The market would be saying the event is essentially over. But right now we’re seeing something more like a shrug.

You know what I mean? The market is pricing volatility cheaper in the short term – remember that’s literally the next 30 days – but it’s not convinced this whole thing is done.

I think that’s exactly right, by the way. I don’t think Iran is any more or less disposed to what they were doing before, because they basically had a hot war going with the Israelis for the last 10 years through Hamas and Hezbollah and all the other stuff they’re doing.

Their ability to do things has been degraded somewhat, but I think the market is reading this correctly.

Here’s the Trade Nobody’s Talking About

Now, generally, after an event like this, this is where I would want to put on my biggest volatility short position historically. And from a portfolio point of view, I think we’re leaning that short overall.

But I would add a new position here just because you’ve had the event, you’ve had a small response so far, and the pricing is very favorable.

The idea for me would be a more levered VIX trade. Something like the 19 puts – buy a few of these. And then buy one cheap call, like a 24 call, right at the next zone.

Because the recent low on these puts – the 19 puts got to about $1.60 in a pretty decent contango. So these could be worth up to two bucks. And then you have your wild card on the 24 calls.

If we get into a new volatility zone as an event, the 24 calls would be worth three and a half to four dollars. And then you’d have the position for nothing.

All you’re trying to do is trade the wild swings, right?

The Confession That’s Eating at Me

You know what? I gotta be honest with you. When I look at my trade log and I see 18 positions that were up money 25% or more, and I didn’t close any of them? You start to get a little grumpy.

18 trades. I gotta have my head examined.

I keep thinking I’m gonna make some big gains on some of these positions instead of just taking money.

Like I said, I’m just gonna take what we can get when we have the volatility. When vol goes up, instead of trying to hit the target, you know, by waiting for the target, we miss closing gains.

So I’m not waiting one day anymore, okay?

Because if there’s gonna be a chaotic four years – and I think there might be – just when vol goes up, take your profits. When vol goes lower, then take your profits. You know what I mean?

What You Should Actually Do Right Now

Here’s your post-geopolitical event trade:

Buy 3x VIX July 19 puts at around $0.99 each
Buy 1x VIX July 24 call at around $1.45

Target the 19 puts to $2.00 when we get that steeper contango – and we will get it, because that’s what happens after these events. The 24 call is your protection if this thing escalates again.

The curve shape is telling you the market sentiment right now. It’s saying we’re 50/50 – just like my room poll showed. But when that uncertainty resolves one way or the other, that’s when you make your money.

And I think it resolves toward less volatility, not more. Because here’s the thing – the Chinese get their oil through the Strait of Hormuz. Do you really think they’re gonna tolerate not having the oil come through for very long? The Chinese import a lot of oil, right?

I believe that probably went into the calculation a little bit.

But you set up a trade with a little bit of leverage, and in this case, you want something that’s gonna be worth a lot for a short period of time and then you close it.

Does that make sense?

Andrew “The Pollster” Giovinazzi

P.S. You know what? I probably should have mentioned this earlier, but if you want to see me actually execute these trades – and hopefully not miss 18 profitable exits like I just confessed to – I share all my real-time positioning in Ripzone. It’s where I do my daily market analysis and trade breakdowns. Give us a call and a member from my team will get you set up. Here’s the number: 888-872-3301.