Traders Massively Reprice Risk Today

BY ANDREW GIOVINAZZI

March 17, 2025

Yo Pit Crazies,

I don’t like to speak in hyperbole, but the Monday to Monday VIX pricing is a little nuts.

What do I mean by nuts? Well, VIX traded 29 last Monday only to trade in the mid-20s by Friday. What I have below is the snap of the futures prices for the VIX in the Apr and May cycle and for the other cycles for that matter.

10 day VIX chart with 1 min candles

Right now those contracts are at a 1 week low. I owned some Apr contracts in VIX options that have given only a tepid response to the massive selloff we have had. There is no scared or covering traders out there right now if the VIX Apr and May contracts are just below 20. I get it that Mar expires Wednesday morning but these smack as too cheap for me.

Now that I have an opinion – they are too cheap – I have to explore why.

And that’s the trip you need to go on right now.

Traders are putting more faith in the FOMC to steady the waters

What is my conclusion? Well the FOMC meets on Wednesday, and traders have already seen a couple of things:

S&P 500 Trust ETF (Ticker: SPY) down 10% and we bounced

CPI and PPI were for sure cooling more than expected

Big Tech and semis in particular bounced

USCongress spending bill passed with no growth

No new tariffs

Traders saw the market drop and there was just a tepid response from VIX and SPY could not sell off. In fact, VIX peaked way before the market bottom last week. The PPI and CPI numbers helped the narrative of slowing inflation and lower rates.

And that is what traders are waiting for. The FOMC says conditions are less rosy and they see a slowdown but it is not terrible. That means whatever the White House is cooking up is working which means longer term there are some green shoots out there.

That is why the bid for volatility hit the dirt Monday and we are likely to see an 18 VIX by Friday after the FOMC minutes. Traders do not kill the bid for VIX this early without a reason.

To Your Trading Success,