BY ANDREW GIOVINAZZI
June 9st, 2025
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
Last Week ending Jun06:
I have to admit, I’m feeling bullish. There were some SPY put spreads I could’ve sold in Weekly Profit Cycles, but I passed—and I’m starting to think I might regret it. It looks like VIX puts and SPY calls are set to pay off. I’m targeting a 598 top for SPY and a dip in VIX down to 17 next week.
Weekly Wrap up
I’d give myself a solid A+ on the SPDR S&P 500 ETF (Ticker: SPY) call. We did close around 599 SPY and I regret not selling any of my SPY put spreads in Weekly Profit Cycles. The downdraft on Thursday was so fast I could not get an alert out to close them and SPY ran back up again. VIX dipped below 17 to close the week. Oh boy some VIX puts might pay!
The biggest news is that the Musk and Trump Bromance of the Century is over. Musk donated to keep a free society and cuts in massive, inefficient government and he only got half so far. My guess is traders think this will push Congress for a smaller BBB. Uncle Sam managed to trim the payrolls by 1000 employees in the last cycle and Wall Street went on a buying spree pushing stocks back to 600 SPY. Just a whisker from all time highs.
Buy the dip was 100% in full form this week. Trump even had a nice call with Xi. And finally rates are not coming down anytime soon even as Europe continues to do so.
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SPY daily price action over the last 30 days with 1 day candles
SPY Sigma (volatility per term) for Jun, Jul, Aug
SPY flapped $600 and Broadcom Inc (Ticker: AVGO) produced stellar earnings so the AI bug is alive and well. Stocks are still rallying on AI so until that is undone, we keep going up.
SIGMA volatility ended the week on the lows as we drop into a heavy contango. Note how all the terms are spreading apart as Aug IV declines less than the others. This is usually very bearish for short term volatility.
SPX realized volatility snap on Jun 06, 2024
10-day realized volatility (HV10) dipped to 12.74 with the biggest close to close move of the week on Friday. That was a rally and realized volatility is getting downright boring again.
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VIX Volatility Curves
Closing VIX curve, May 30, 2024
Closing VIX cash and curve, June 06, 2025
The VIX curve moved into a very steep contango. Generally I see this when VIX is 12 not 17 so there is some serious volatility expectation out in the summer months. This is when the volatility products really decay since the futures are so expensive.
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OP VIX Zone Watch
VIX ZONE 1 9-13
VIX ZONE 2 13.01 TO 17.99 <We are here
VIX ZONE 3 18-23.99 ← We were here
VIX ZONE 4 24
VIX broke into Zone 2 and stayed for the close this week. This is a new 3 month closing low so some of the Apr madness is subsiding. The move back into Zone 3 was all of 20 minutes on Thursday.
VIX 30 day chart with 1 min candles
VIX spent the whole week going down on the data. Besides the Trump/Musk dust up, it was a terrible week to be long VIX.
The Big Call
I was bullish last week and bullish this week. We are still in the put up phase of the BBB but it might happen. AI earnings are robust and Meta Inc (TIcker: META) needs unlimited energy for AI. If we can rally on the Trump/Musk breakup, we can rally on anything. Next week just quiet highs of 605 SPY but sub-16 VIX.
To Your Trading Success,
AG aka “Vol Man”
