BY ANDREW GIOVINAZZI
February 14, 2025
Yo Pit Crazies,
Me and my Option Pit homies are in Baltimore and getting ready to leave this very hospitable city. What is not hospitable is the fight going down in Washington DC 45 min away. One part of the Government is trying to make Uncle Sam lighter and more efficient. The other part of the government does not.
Even when D.O.G.E is effective, government spending will go down by $1 Trillion. That will mean demand and employment will go down and GDP will be flat if we are lucky. Most of the economic growth lately was USGOV spending and employment. Both of those are unsustainable. The window for cuts is very short and the market gets that. Getting the Government to spend closer to what it makes is the big reason now for a S&P 500 Trust ETF (Ticker: SPY) rally. The last 3 months since the election has mostly been a seesaw for SPY. I believe that the story is about Government Spending Cut success. The USA cannot sustain deficits this size for the foreseeable future
Below is the 60 day implied volatility for SPY. Note that is bouncy as SPY moves but post-election two month implied volatility is higher. That is the new mercurial President in action. That also means there is opportunity for traders. More volatility is more movement.
My take on the story is as long as D.O.G.E moves forward, the market will like it. Be ready to get under your desk if the D.O.G.E progress stops before any real changes are made. That is the top story and option prices will tell us how the market reacts.
I will hit trading this in the Trading Desk today. Join and find out what I am going to do.
To Your Trading Success,
AG
Andrew Giovinazzi
30-Year Trading Pro
See what's hot at option pit
CAPITOL GAINS: SMR Aug16 7 call closed for a 150% gain
DELTA STRIKE: VLY Mar15 8 puts closed for a 88% gain
PFE May17 26 calls closed for a 66% win
OP MENTORING: SPY Mar22/19 510 put calendars and 520 calls for 6.4% gain
OPTION SHOPPER: ERX Mar28 65 calls closed for a 90% gain
