BY ANDREW GIOVINAZZI
September 21th, 2025
Yo Pit Crazies,
If some of my Option Volatility Jargon is vexing, our Glossary is here.
AG’s alter-ego Vol Man here with my weekly analysis. As usual, I will start with my last forecast…
Last Week’s Big call
The Week ending Sep 19th:
“I expect the Fed to drop by .25% on rates, stocks will like it a
bit and put in an all time high and then we sit around and wait
for the knuckleheads in Congress to do their job and fund the
government in a reasonable manner. VIX should tickle 13 for a
Zone 1 touch.”
Weekly Wrap up
I’d grade myself a C since since the Fed cut .25%, stocks put in an all-time high and Congress is failing the American people as expected.
What I was dead wrong on was the VIX. I expected Zone 1 (VIX 8 to VIX 13) and we ended the week near the higher end.
Forget AI riches when we have the FOMC blaming a 0.1% increase in unemployment to justify lower rates Meanwhile, the latest Consumer Price Index (CPI) came in hotter than expected while the Fed runs a $2,000,000,000,000.00 annual deficit.
As I write, Senators are adding a good chunk of the Covid Era Spending Blowout to get it through the chamber.
The Better Business Burea just got laughably expensive.
All this deficit spending did just what you’d expect: Gold rallied back to near highs of the year.
People talk about the Uniparty and at this point Congress needs their spending authority taken away since they abuse it. The issue is who will cut spending? Once again, we wait for the bond market to bring some order.
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– 18.79% on another set of October VIX puts
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SPY daily price action over the last 30 days with 1 day candles
SPY Sigma (volatility per term) for Sep, Oct, Nov
Technology continues to deliver higher stock prices. To investors that is all that matter as SPY spent most of the week near all-time highs with only a brief blip down on Wednesday.
SIGMA volatility for Oct and Nov is pretty flat to higher on the week. None of that makes sense post FOMC announcement. These numbers should be lower because realized volatility is lower.
SPX realized volatility snap on Sep 19, 2025
The 10-day realized volatility (HV10) remains low at 5.55%, signaling a continued bull market environment. Realized volatility is supposed to pull down option premiums but 2025 is the year volatility gravity is not taking place. This is a crazy low level of realized volatility for the relative price of VIX.
VIX Volatility Curves
Closing VIX curve, Sep 19, 2025
Closing VIX cash and curve, Sep 12 2025
The VIX curve remains in a steep contango but less steep than last week because VIX rallied 1 point. The Oct future is only .05 lower after a major event which is unusual. This is a relative surprise and I think portends some short term downside in SPY.
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OP VIX Zone Watch
VIX ZONE 1 9-13
VIX ZONE 2 13.01-17.99 ← We are here
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 could not hold new highs for the week in VIX. VIX did give the weekend up by the end of Friday.
VIX 30 day chart with 1 min candles
The up and down of this week’s VIX chart runs through Wednesday is completely normal. But that changed after the FOMC meeting. We should have seen a drop, but that didn’t happen.
The Big Call
I expect VIX to fall because stocks are not moving very much. However, Congress has dissapointed the bond market . The Uniparty spent all spring and summer in a budget exercise that might well end up leaving the massive spending levels from the prior administration.
The only entity big enough to sink the U.S. Equity Market is Congress and the Federal Government. Looking forward, market stress should be a good place to reshort the
VIX this coming week. I think the VIX tops 17 at least once this week with the SPY dropping below 650. I don’t see us with new closing highs unless there is a sensible budget resolution.
To Your Trading Success,
AG