Nvidia and AMD will pay the US government 15% of their revenue from chip sales in China. They made this deal to get export licenses for their semiconductors. Many news outlets, like the Financial Times and CNBC, have reported on this agreement. The news comes at a time when there are concerns about how it might affect US equity index futures, which could see changes.

Key Players in Semiconductor Industry

Nvidia and AMD are major players in the semiconductor industry and are facing stricter regulations regarding their business in China. This agreement highlights the complications involved in international trade and compliance with government rules. With the new deal, Nvidia and AMD have a clear cost structure: 15% of revenue from chip sales to China for export licenses. This clarity eliminates the uncertainty of a possible complete ban. Now, the market has a specific number to consider for valuations instead of just guessing. From our view, this 15% revenue cost will directly impact profit margins in an important market. These stocks have reacted sharply to regulatory news in the past, like the significant drops after export control announcements in late 2022. Traders expecting a similar negative reaction in the near term might want to buy put options on NVDA and AMD. Conversely, the removal of uncertainty could be seen as a long-term benefit, creating a stable but pricier route for doing business in China. This clarity may attract institutional investors who had previously stayed away due to regulatory concerns. Those who believe the worst is already priced in could consider buying call options, hoping for a price recovery in the coming weeks.

Anticipated Market Volatility

With these mixed perspectives, we foresee a period of increased volatility for both stocks. The Nasdaq Volatility Index (VXN), which measures expected volatility for the Nasdaq 100, has already risen by over 5% in early August 2025 after initial rumors of the agreement. Traders who anticipate a significant price move but are unsure of the direction may want to use straddles to profit from this uncertainty. China has consistently made up about 20% of data center revenue for these companies, meaning that a 15% tax on this segment will noticeably impact profits. This will be a key topic in the upcoming quarterly earnings calls, scheduled for late October 2025. Using option spreads that expire after these earnings reports could be a smart way to trade the expected outcome. Create your live VT Markets account and start trading now.

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