BY ANDREW GIOVINAZZI
June 30th, 2025
Yo Pit Crazies,
I’m anticipating a volatility crush soon — a ‘Vol Bomb’ where the VIX collapses. The problem, of course, is that the U.S. government has become too large and deeply entangled in the economy. It’s like waiting for that overbearing uncle to leave the Fourth of July party — in this case, Uncle Sam. Traders are eyeing the BBB, while investors are bracing for the July 9th tariff decision. Meanwhile, Powell has taken rates from historic lows to historic highs, leaving markets on edge.
The SPDR S&P 500 ETF (ticker: SPY) just hit a new all-time high — and typically, that would push the VIX down into the low teens, around 13 or 14. But that’s not happening.
That’s where the opportunity lies.
VIX premium is crazy high
Traders are pricing the SPY July 11 straddle at around $11.50. In my view, that’s fairly priced given the potential for market-moving news. Potential being the key word.
SPY Jul11 options snap
Each of the options terms around July 9 is carrying a noticeable premium — traders are clearly willing to pay up for movement, as reflected in the elevated pricing (see red arrows in image below). Meanwhile, SPY continues to grind higher, seemingly in anticipation of good news.
I expect the good news to follow once the White House finishes setting the stage. That should drive the VIX lower, likely around July 9. In the meantime, we could see some short-term noise — which is exactly where this week’s opportunity may emerge.
To Your Trading Success,
AG
