BY ANDREW GIOVINAZZI
June 1st, 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 May 30:
We’re seeing two strongly conflicting signals: the VIX has been climbing all week, yet every dip in SPY is being aggressively bought. As a result, the VIX curve remains unusually flat. I anticipate Trump may deliver market-friendly news over the weekend.
Meanwhile, nuclear stocks are surging as the U.S. appears to be embracing nuclear energy once again. AI-related names are also rallying. Unfortunately, U.S. lawmakers are missing in action—disappointing.
Looking ahead, I expect SPY to dip below 570 next week, but buyers will likely step in quickly on any weakness. The upside seems capped around 590, and the VIX may struggle to break below 20.
Weekly Wrap up
I’d give myself a solid B+ on the SPDR S&P 500 ETF (Ticker: SPY) call. Trump did, in fact, deliver positive news over the weekend, and the market responded with a strong rally. Every dip was aggressively bought, though SPY only dipped into the low 580s—far above the previous week’s 575 level, which never had a chance given the surprise factor of the news.
SPY topped out in the low 590s, and the VIX briefly broke below 20 early in the week, though it struggled to stay there consistently.
Overall, the news this week was mostly positive. However, tensions flared again as Trump criticized China for allegedly violating rare earth export agreements. Meanwhile, in the Senate, there are growing concerns that expanding the deficit—even under the banner of making it “bigger and more beautiful”—might not be the wisest move.
Still, the market remains unfazed. Every dip continues to be bought. Since AI became the dominant market narrative, even weak U.S. policy signals haven’t deterred buyers.
For the most part, earnings have been solid. If we can survive the weekend without the TACO/no TACO tweet drama escalating, things might turn positive. Despite all the noise—good and bad—throughout the year, SPY is still just 20 points off its lows.
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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 regained significant ground this week, helped by the pause on the looming 50% European tariffs—news that traders welcomed. The market rallied for most of the week, fueled by Nvidia’s (Ticker: NVDA) strong earnings. However, late in the week, renewed concerns over China trade tensions caused a few jitters.
SIGMA volatility ended the week near its lows, despite a few midweek upticks. It’s now approaching a one-month low as traders increasingly believe the “Tariff Tantrums” may be winding down.
SPX realized volatility snap on May 30, 2024
10-day realized volatility (HV10) dipped to 15.53, reflecting a quiet four-day week where the major rally was the only notable move. Daily price swings have remained relatively modest, and SPY’s realized volatility had already hit notably low levels two weeks ago.
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VIX Volatility Curves
Closing VIX curve, May 30, 2024
Closing VIX cash and curve, May 23, 2025
The VIX curve shifted again this week, moving back into contango. Despite all the market drama, VIX remains in contango—though now at a slightly elevated base level. In the short term, contango continues to signal a bearish outlook for volatility.
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OP VIX Zone Watch
VIX ZONE 1 9-13
VIX ZONE 2 13.01 TO 17.99
VIX ZONE 3 18-23.99 ← We are here
VIX ZONE 4 24
VIX remained in Zone 3 throughout the week, drifting toward the lower end—even after briefly appearing poised for an upside breakout. As we’ve seen repeatedly, VIX rallies that fail to hold are quickly sold off.
VIX 30 day chart with 1 min candles
VIX attempted to rally throughout the week in response to last week’s Moody’s downgrade, ongoing China-related turmoil, and continued dysfunction in Congress. However, it ultimately closed at the week’s lows—signaling that traders aren’t particularly concerned heading into the weekend.
The Big Call
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.
To Your Trading Success,
AG aka “Vol Man”
Andrew Giovinazzi
30-Year Trading Pro
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