BY ANDREW GIOVINAZZI
August 10th, 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 Aug 08:
We drift to mid 630s for SPY as more earnings come out. Apple Inc (Ticker: AAPL) had revenue growth but traders hated Alphabet Inc (Ticker: GOOGL) even though the numbers were great. At this rate, we drift back to sub 17 VIX as long as there are no Nuclear Sub Games.
Weekly Wrap up
Talk about Advance Notice!!! I give myself an A+ because we drifted up to the mid 630s and VIX is trading mid 15s.
Liberation Day 2 has come and gone. Now, the rest of the world faces what the U.S. already knows well: tariffs on imported goods. As usual, it’s businesses that shoulder the cost of political indecision—when lawmakers can’t say no, someone else picks up the tab.
On the bright side, corporate earnings were strong. Apple Inc. (Ticker: AAPL) saw gains on positive manufacturing news, and Alphabet Inc. (Ticker: GOOGL) crossed the $200 mark. The AI gravy train, it seems, is still running full speed ahead.
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Corporate earnings—especially from Big Tech—have been nothing short of explosive. Microsoft Corp. (Ticker: MSFT) and Reddit Inc. (Ticker: RDDT) surged on momentum from AI, cloud, and advertising growth. That rally began Monday and hasn’t slowed since.
Chip stocks are also on fire, driven by apparent supply shortages. Gone are the days of chip gluts—though Qualcomm Inc. (Ticker: QCOM), part of my Flash 5 portfolio, still seems to be feeling some of that old-school pain.
The real risk remains inflation. Bond auctions are likely to be the next source of market volatility, while traders have largely moved on from tariff concerns.
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SPY daily price action over the last 30 days with 1 day candles
SPY Sigma (volatility per term) for Aug, Sep, Oct
This Friday was the mirror image of last Friday—traders snapped up everything in sight. If you’re keeping score, every dip has been bought since the second week of April.
SIGMA volatility is confirming the rally as we approach 30-day lows. The steep contango has returned, signaling that traders are still bracing for a potential shock in September or October.
SPX realized volatility snap on Aug 08 2025
10-day realized volatility (HV10) is holding at 13.23%, elevated by last Friday’s sharp selloff.
Despite that, stocks continue to climb on declining realized volatility—still one of the strongest bullish signals in the market.
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VIX Volatility Curves
Closing VIX curve, Aug 08, 2025
Closing VIX cash and curve, Aug 04, 2025
The VIX curve steepened again, a short-term bullish signal for SPY. While pundits continue searching for reasons the market might fall, contango remains a strong confirmation of ongoing rallies. The September VIX contract has dropped below 20, making September VIX puts look particularly attractive.
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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 ← We touched here
VIX ZONE 4 24
VIX briefly entered Zone 3 earlier in the week, but quickly collapsed back into Zone 2. It saw a short-lived bounce following Fed Governor Waller’s comments, then drifted toward three-month lows. Not exactly a bullish close for the VIX.
VIX 30 day chart with 1 min candles
The VIX spent most of the week drifting lower and is now nearing the midpoint of Zone 2. The main issue is that it seems anchored around 18—a gravity point it hasn’t been able to break below. That’s not too surprising, given the 360-day realized volatility for SPY is also hovering near 18. We haven’t seen a new VIX low since April 4th, and when that happens, it will mark a meaningful and bullish signal for SPY.
The Big Call
I expect SPY to reach new highs next week, though likely not much beyond $640. With earnings season mostly behind us—and results largely strong—the market appears poised to benefit from the typical summer slowdown. VIX could dip below 15% by week’s end, and we may test year-to-date lows in volatility as the summer doldrums take hold.
To Your Trading Success,
AG
