TMAD Weekly: Summer and Potential Correction
$JETS $UVIX $VSH $HST
Hi everyone,
The recent move higher is mostly artificial, driven by inflation, dollar weakness, and the “Iran peace deal” story, which pushed oil and volatility lower. Without those factors, the market would be much lower. The market itself doesn’t really want to go higher on its own. Supportive flows are helping in the short term, but the structure is still fragile. As we said, we expected a small pullback in June, but that’s just the beginning of something bigger, most likely headed into the Midterm election.
Let’s look into the details on volatility and SPX levels. + TOP trades for this week.
UVIX 0.00%↑ 2x LONG VIX FUTURES ETF
We’re seeing fresh signs of volatility protection buying in the UVIX options market. The latest gamma exposure chart shows meaningful call flow coming in just above the current price, with a large positive bar at the $3.50 strike. Overall gamma exposure sits at a healthy +$9.8 million. This activity lines up with traders using UVIX calls as a leveraged way to protect against or position for a volatility spike. While the broader equity market has been grinding higher amid recent geopolitical headlines, the options market is quietly building insurance for the other side.
Iran Conflict
The current agreement with Iran is being treated more as a temporary pause than a lasting resolution. The core issues, including the remaining highly enriched uranium, have not been addressed. Right now, the base case points to a fragile “armed pause” with ongoing proxy activity. There’s roughly a 35–40% chance of a sharper escalation by year-end, according to current risk assessments. A genuine, durable peace deal remains unlikely.
