BY ANDREW GIOVINAZZI
April 11th, 2025
Yo Pit Crazies,
Today was one of those days where the overnight trade foreshadowed a severe trading crisis in the morning but it did not come to pass. The S&P 500 Trust ETF (Ticker: SPY) managed just a 10-point gain, or about 2%—a relatively modest move considering the VIX hovered above 40 for most of the day. The Death Cross which remains tantalizingly close, where the 50-day Moving Average falls below the 200 day and was saved by the rally into the close.
SPY 1 month chart with 1 day candles
The short version: Congress is pushing through another bad spending bill—just not as bad as previous ones. I expected the lack of any real spending cuts to hit bonds hard today, and for most of the session, that held true as bonds traded in the red before staging a late rally. All in all, it was a good week for Two Way Trades with the crazy volatility.
Check out this chart of VVIX or the volatility of volatility – the real story for the close going into the weekend:
1 month VVIX chart with 1 day candles
VVIX is making higher lows into the Weekend
VVIX is also making lower highs after spiking to nosebleed levels earlier this week, triggered by the blow-up of a Japanese hedge fund caught in a Treasury bond basis trade. The key thing to remember with VVIX: volatility cuts both ways. Meanwhile, VIX closed at 37.5, carving out a pattern of lower highs and higher lows.
It appears that few traders are comfortable with the Weekend Risk of gosh knows what for News Bombs. With the Tariff Policy now at 10% across the board, it appears the end policy is in sight. The big question now is how aggressive China gets with its 125% tit-for-tat tariffs on the U.S. If the pace of headline shocks starts to ease, VVIX may begin pricing in downside risk rather than upside volatility.
I did pick up some VIX 23 puts in the May cycle.
To Your Trading Success,
AG
Andrew Giovinazzi
30-Year Trading Pro
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OPTION SHOPPER: ERX Mar28 65 calls closed for a 90% gain
VIX 30 Day Chart