US equity index futures show a slight rise, with S&P 500 eminis up by 0.15% and Nasdaq futures increasing by 0.2%. Nvidia and AMD are expected to send 15% of their chip sales in China to the US government. Japan’s Mountain Day holiday has closed markets there, which impacts US bond trading. Fed Board Governor Bowman suggests a rate cut in September due to wider economic factors.

Trade Deal Deadline Approaching

The US is keeping an eye on an upcoming trade deal deadline with Canada, Mexico, and Switzerland. China’s July data shows that consumer price inflation stayed the same year-over-year but exceeded expectations month-over-month. Chipmakers like Nvidia and AMD are directly affected by the new requirement to pay 15% of their China sales to the US government. This will shrink their profit margins in an important international market and may pressure their stock prices. Bearish option strategies, such as buying puts on these companies, could be an attractive approach. For context, back in 2023, China accounted for roughly 20% of Nvidia’s total revenue. During the 2018-2019 trade disputes, similar tariff announcements caused the implied volatility of semiconductor stocks to spike over 30% quickly. We should expect a similar volatility increase, making it risky to sell options on NVDA or AMD until the market adjusts to this news. At the same time, Fed Governor Bowman’s suggestion for a September rate cut could positively influence the overall market. Recent inflation data for July 2025 shows the Consumer Price Index (CPI) at 2.9% year-over-year, which supports this dovish outlook. The CME FedWatch Tool now suggests a nearly 70% chance of a 25-basis-point cut next month, which could bolster index call options.

Market Impacts of Japan Holiday

With Japan’s market closed today, we are seeing lower liquidity, especially in the US bond market. This limited trading environment, along with mixed signals from the tech sector and the Fed, may keep the S&P 500 stable this week. This indicates that setting up range-bound index option strategies, such as an iron condor on the SPY, might be a smart choice until a clearer trend develops. Create your live VT Markets account and start trading now.

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