BY ANDREW GIOVINAZZI
March 26, 2025
Yo Pit Crazies,
Traders are always looking for a reason the market went up or down. They might be right half the time, but ultimately it does not matter why. The only thing that matters to traders is how they are positioned into a big move. When premiums look a little juicy or elevated, a good income strategy might make sense. Hans Albrecht knows a thing or two about income, having successfully managed a billion dollars in options overwriting funds.
You might be wondering what to keep an eye on to get into the right position to do that. I find the VIX curve to be very helpful in this case. I’ve been hearing talk about something called ‘Freedom Day’ around April 2nd, when President Trump finalizes his tariff regime. This speculation caused the VIX curve to flatten significantly on Wednesday.
VIX curve midday Wednesday March 26th
You’re probably wondering, ‘Why does that matter?’
Let’s take a closer look at how the VIX curve has behaved over the past few days.
The VIX curve helps define market sentiment
Take a look below—March 17 was the more volatile day, but by the following week, much of the excitement had faded, and the front end of the VIX curve began to trend downward (that’s the far left side of the graph). By the close on the 26th, the curve had lifted and flattened a bit, which typically indicates that VIX traders are starting to assess the market and aren’t pleased with what they’re seeing.
VIX historical curve from Mar 17, 24, 25 and 26
Based on today’s market activity, traders are eyeing April 2nd as a potential catalyst. The flatter VIX curve suggests they anticipate some volatility in the S&P 500 Trust ETF (Ticker: SPY). I expect SPY to experience decent fluctuations through at least April 2nd, as long as the VIX curve remains flat.
It’s not as flat as it could be, but it’s definitely flatter than earlier in the week, indicating that traders are cautiously betting on a VIX drop in the near future. I believe that drop will likely happen after April 2nd.
To Your Trading Success,
AG
Andrew Giovinazzi
30-Year Trading Pro
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