European indices rise at the open: Eurostoxx, DAX, and CAC 40 up 0.5%, FTSE up 0.2%
by VT Markets
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Aug 6, 2025
Dip Buyers are Taking Action
Dip buyers are showing interest again after a rough start to August. Today, European indices and US futures are both rising. This comes after some choppy trading where maintaining gains has been tough. We view this increase as cautious, rather than a strong rally, especially in light of recent weak US services data.
This uncertainty is also seen in options pricing. The VIX, which measures expected volatility, has stayed around 18 this week. This is higher than the calm periods we experienced in the second quarter. The increased premium means it’s costlier to buy protection, but it also offers better returns if you sell it.
For traders who think this bounce could be short-lived, buying put spreads on indices like the DAX or S&P 500 could be an affordable way to prepare for another market drop. The sudden sell-offs we saw at the end of 2023 remind us to stay alert for quick changes. Since purchasing outright long puts is expensive now due to the high implied volatility, using spreads can lower the initial costs.
Alternative Trading Strategies
If we think the market will stay in its current range, selling premium might be appealing. For example, an iron condor on the Euro Stoxx 50 could profit if the index remains between two specific price points in the coming weeks. This strategy takes advantage of the market’s unclear direction right now.
All eyes are now on the upcoming inflation reports. The latest US CPI figures are set to be released next week, which have been major market movers over the past two years. If the number is higher than expected, it could quickly dampen today’s positive mood and trigger another wave of selling.
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by VT Markets
Aug 6, 2025
Insights 
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