BY ANDREW GIOVINAZZI
October 19th, 2025
Yo Pit Crazies,
AG’s alter-ego, Vol Man, here with my weekly analysis.
As usual, I’ll start with my last forecast, cover last week’s market action and volatility levels, and end with my outlook for the next five days.
(If some of my option volatility speak is vexing, check out the glossary here.)
Last Week’s Big Call
The Week ending Oct 17:
The Gaza Peace deal euphoria lasted 1.5 hours into the trading day.
I have to hand it to Xi, his timing is great. Congress is full of idiots who cannot do their job and Trump’s rare earth push is clearly the correct move going forward if China turns off the tap of what was a lucrative industry for them. Xi will likely look for more concessions.
This market, due to Congressional Malfeasance, is illiquid and this China news was the 2nd negative news item to hit. The “Andrew rule” is three bad news headlines with no short term solution and we see Zone 4.
Congress is AWOL, Xi is testy and Trump is Trump.
I do not see how VIX avoids Zone 4 next week and SPY touches the 630s. The illiquidity due to Congressional inaction will exacerbate any SPY move.
Weekly Wrap Up
I give myself a C.
The illiquidity in stocks should have pushed SPDR S&P 500 Trust ETF (SPY) down at least 2 or 3% but we did not get close. Heck SPY did not break $650. VIX did ramp to 29 for a brief moment but that was over the same day it started with VIX closing closer 20.
Earnings are huge, led by banks and tech.
Taiwan Semiconductor (TSM) put up huge numbers. Pundits are griping about the level of tech investment but that is what is getting the dollars. It did not hurt that Fed Chair Powell likely will lower rates from the comments he made. Bond yields touched lows of the year as demand jumped again after Jpow’s remarks.
I will say there are two important things on a one way trajectory: Gold Prices and the Government Shut Down. Gold did fade Friday somewhat but the trajectory is one direction with no end and that is usually destabilizing for markets. The Government Shutdown has become trench warfare.
Both parties could try and fix the Affordable Care Act to make it more affordable but for one that would admit defeat and for the other it would take away something to campaign on.
Traders are seeing this last at least one month if not more.
The market does not like uncertainty but VIX loves it.
This Week’s Volatility Wrap-up
SPY daily price action in the last 30 days & Sigma (volatility per term) through 2026
SPY this week looks very different from the prior 30 days. There many 1% ranges up and down almost everyday this week as traders had to field multiple issues from trade, possible bank issues and the continued shutdown. Two things that were an issue for most of the year, interest rates and tech earnings, were absent from the problem list.
SIGMA volatility touched a 30 day low but came back somewhat.
November and December volatilities remain very high for right now. Likely due to Shutdown sentiment.
SPX realized volatility snap on 10/17/2025.
The 10-day realized volatility (HV10) is still low at 17.58% and from the snap above we clearly started a new trend.
SPY close to close this week was not as active as I would think with VIX near 20 or above everyday. Intraday moves are still very large. The reality is the concerns about the market have now filtered into trading as the rise in VIX over the last two weeks was very accurate.
If all this volatility has you feeling nutty, consider a strategy that doesn’t rely on which way the market moves.
VIX Volatility Curves
Closing VIX curve 10/17/2025
Closing VIX cash and curve 10/10/2025
The VIX curve is still very flat but 1 point lower than last week. My read on that is there has been a bit of a selloff and now traders can breathe easier. Stocks were one way up for weeks. A flat curve is an uncertain curve so VIX direction can easily be up or down 3 points next week. I expect SPY to outperform the weekly straddle in one direction or another.
You can check out Volatility 101 basics on our Option Pit YouTube channel – now streaming.
OP VIX Zone Watch
VIX ZONE 1 9-13
VIX ZONE 2 13.01-17.99
VIX ZONE 3 18-23.99← We closed here
VIX ZONE 4 24 We touched here
- We dropped to the middle of Zone 3 after the most volatile week in months. The moonshot to 29 early on Friday was mostly bank crash fears that were unfounded. The ease at which VIX can move is a result of how little liquidity there is at a price.
VIX 30-day chart with 1 min candles
Zone 4 drop at the end of Friday was crazy fast. Option premiums melted by ¼ by the end of the day from the morning. Clearly we are not out of the VIX event sparked by Trump’100% tariff comments last week. I would need to see sub-19 VIX for that.
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The Big Call
The market wants The Shutdown to end. I can remember shutdown trading in the 1990’s standing in a pit with nothing to do. Right now the whippy market is a symptom of that. If traders are not trading, liquidity is scarce. We can see all time highs on good earnings this week but I do not expect to stay there. VIX will range and we likely will see 24 again if there is no progress on Trade or the Shutdown. I expect larger ranges for SPY this week 675 on a gap from good news but tickling 650 again.
To Your Trading Success,
AG
