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Making Moves When Nobody Knows Anything
Why Expected Value Belongs in Everyone’s Toolkit
Jeff Sanchez
May 27, 2025 • Est. Reading Time: 8 minutes
Welcome back to Hitting the Bid Weekly!
On deck this week…
Equities try to keep pushing to the upside but finally take a break
Big earnings day Wednesday with a smattering of economic events
Bonds and silver and gold, oh my!
Who doesn’t love a little bit of math?
Around the Market
It took about a month, but SPY finally took a breather from its impressive run, closing about 2.5% lower on the week (from the Friday, May 16 close to the Friday, May 23 close). That V-bottom off the April 7 lows was something else—we’ve surpassed the March 25 high but still sit about 5.5% below the all-time highs from February 19.
One thing to watch is the gap on the chart between May 9 and May 12 at $567.50. If SPY makes its way back there, it’ll be a key decision point: will it find support at the gap or break lower? I’ll obviously be watching…
Daily chart of SPY over 1Y time interval
Other notable market moves since last week:
Volatility (VIX) ticked higher, rising from the 17s to close at 22.29. If volatility continues to climb, I wouldn’t expect much upside momentum in equities.
Gold found some strength, jumping roughly $180 on the week—more on this later.
Bonds dipped midweek after a weak 20-year auction but managed to regain footing by Friday.
The US dollar slid nearly 2%, falling back below the 100 mark.
Crude oil bounced around but ultimately ended the week basically unchanged.
Bitcoin surged to new all-time highs, briefly topping $112,000. Could this signal even more strength in the weeks ahead?
The Week Ahead
Economic Calendar
FOMC Minutes (Wed 5/28 2:00p ET)
PCE Price Index & Personal Income and Outlays (Fri 5/30 8:30a ET)
ISM Manufacturing PMI (Mon 6/2 10:00a ET)
JOLTs Job Openings (Tues 6/3 10:00a ET)
Notable Earnings
Not an exhaustive list — just a few I’m watching closely for potential market impact.
On My Radar
Last week, I placed a bullish trade in /ZN (10 Year T-Note Futures). Selling pressure appears to have slowed, and the 109–110 price level has held—for now. I structured the trade based on what I believe had positive expected value (a topic we’ll explore later).
If I didn’t already have significant metal exposure (I’m long SLV, neutral GLD, and long NEM), I’d be eyeing gold this week for a potential trade. Like Treasuries, this is still a play on yields, given that gold prices tend to move inversely to yields—though it’s worth noting that gold has continued to trend upward through most of 2025, even with 10-year yields holding above 3.8%.
Daily chart of GLD over 1Y time interval
GLD is currently trending in a downward channel, so I’m holding off on entering a trade until I see a break of that trend. This is especially important given my bullish bias, which runs counter to the recent price action over the past month. If GLD breaks to the upside and my bias still holds, I’ll look to structure a long trade. If it breaks to the downside, I’ll either stay on the sidelines or reassess whether I want to add short exposure to the portfolio.
One important note if you're considering options trades in gold: implied volatility (IV) tends to correlate positively with price. That means if gold rallies, IV often increases—so selling call options can be hit on two fronts: rising price and rising volatility. This is the opposite of what we typically see with equity index ETFs like SPY and QQQ, where price and volatility usually move inversely.
Because of this dynamic, I may shift my neutral GLD trade to a more bullish, directional setup in line with my current bias. While a short put spread is technically bullish, it doesn’t benefit from rising volatility. If I want exposure to both upward price movement and potential IV expansion, I’d consider a call diagonal spread. I’d be structuring that trade using options on either /GC gold futures or GLD.
What’s Top of Mind
In last week's edition, I talked about how nobody knows anything—and why that means we should rely on probabilities to guide our decisions. One of the most effective ways to do that in trading (and in life) is through the concept of expected value (EV).
In truth, we already use a version of EV in everyday life. Anytime you’ve asked yourself, “Is this worth the cost?” or “What am I getting back for the effort I’m putting in?”—you’re weighing value, even if informally.
Expected value just takes that thinking one step further. Once you start estimating probabilities and applying them to potential outcomes, your decisions become more informed and more objective. It’s especially helpful when facing uncertainty. EV gives you the framework to take smart risks that have potentially asymmetric rewards—the kind where the downside is small but the upside is meaningful. Whether you’re thinking about a career move, investing time in a side project, or debating a big purchase, EV can help you make those calls with confidence.
So if you’re ready to nerd out on the math behind smarter decisions, check out this post—let’s turn uncertainty into opportunity, one equation at a time.
Thanks for reading this week!
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Hitting the Bid content is for informational and entertainment purposes only. The information contained is not, nor is it intended to be, trading or investment advice or a recommendation of any security, futures contract, digital asset or alike. Trading and investing contains risk. All investors should evaluate their own risk tolerance, financial situation, and investment duration before entering any trade or investment.