Jul. 25th, 2025 Option Outlook

Pushing to 6400

Good Morning! SPX is pushing through thick resistance to get to 6400, but closed only modestly up on the day.

The advance to 6400 has been slow and rocky, as has been expected. I think we will hit it by the end of July, but it will continue to be slow and rocky. I do not know what the macro reaction will be to the tariff deadline, but there is sticky vol for August 1 and subsequent weeks. If the answer is that markets will shrug or take a wait and see approach, 6400 is not only assured, but likely a pin through Aug opex with some peeking above. Fridays tend to be fairly calm, what can we expect today?

Today is showing a massive short call strike for dealers at 6400. That will create pressure to the downside, even though end of the month flows favor upside. We can expect a tight mean reversion range today that might produce a lot of volatility instead.

Next week has a little bit of resistance overhead and vanna is relatively low. There is some support below, so while I do think we can get to 6400, it will continue to be a rocky road to get there.

Thanks to some significant put buying, overall vanna has jumped $10B. In order to see significant downside, the Aug. 1st deadline (or other catalyst) needs to drop SPX below 6150. If 6150 is passed, we can expect a major vol event. 6150 is the downside extreme for support for the foreseeable future, and we will likely see a minor vol event to get there.