To The Moon

📊 IV Rank Collapse

I’m watching $SPY IV Rank collapse to an extreme 1.51%, one of the lowest readings of the year. Option pricing has been aggressively crushed relative to realised movement. This is deliberate positioning, not noise, as we move into a holiday shortened tape where dealers are comfortable selling premium and risk appetite stays contained.

📉 Volatility Drift Confirms The Message

I’m seeing both IV and ARV completely flattened across the session. The volatility drift data shows realised volatility hugging the floor while implied volatility continues to bleed lower. With early market closes and Christmas shutdowns, there is no catalyst forcing repricing. This is textbook year end behaviour, low participation, muted flows, and compressed ranges.

📈 Structure On The Charts

I’m noting on both the 4H and 30m charts that $SPY remains constructive, riding the mid to upper Keltner and Bollinger structure. Price continues to respect rising EMAs, with buyers stepping in on shallow pullbacks. Compression here is directionally neutral in the very short term, but structurally bullish as long as key support near $686 holds.

📈 Index-Level Context Matters

I’m also watching $SPX closely here. The index needs to hold and continue working through the $6900 region to confirm higher highs within this low-volatility regime. Price is compressing constructively above rising EMAs, not rejecting them. As long as structure holds and volatility remains muted, the tape is signalling stability rather than exhaustion.

📉 Volatility Compression Is Broad, Not Isolated

I’m also watching $VIX trade at levels not seen since 13Dec24, reinforcing how deeply volatility has been compressed across the system. The cross-asset volatility map shows $GLD, $VIX, and $SLV firmly in the sell-volatility zone, confirming this is not just an equity-specific phenomenon. When hedging instruments and defensive assets are priced this quietly, it usually reflects broad confidence in near-term stability rather than complacency in a single market.

🧠 Why Extreme Calm Rarely Persists

I’ve seen IV Rank collapse like this many times into year end, and it often marks a volatility floor rather than a ceiling. When realised volatility compresses while price holds trend structure, the market is storing energy, not releasing it. January typically reintroduces participation, macro repricing, and dealer hedging dynamics. Compression regimes tend to end quietly, then shift suddenly.

🎄 Year End Context

I’m treating this as a holiday regime. Liquidity is thin, moves are slower, and breakouts are less likely to follow through until participation returns in early January. For now, compression is the signal. Expansion comes later.

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