US and Chinese officials gathered in Madrid to talk about trade issues, focusing on tariffs and TikTok. The current tariffs agreement will end on November 10, but it may be extended if no new deal is made. There is a chance that TikTok could be banned in the US. Although the deadline is near, it’s likely to be pushed back again, similar to earlier delays. The US Trade Representative is hopeful about finding a solution for TikTok while keeping a good relationship with China.

US Treasury Secretary’s Comments

US Treasury Secretary Scott Bessent mentioned that Trump respects China’s Xi and noted the firm stance of Chinese officials. However, he stressed that the US will not compromise on national security. Bessent added that a lack of agreement on TikTok wouldn’t impact overall US-China relations. The positive mood from the Madrid talks should help keep market fluctuations low for now. However, the November 10 tariff deadline could cause significant market swings. With the VIX volatility index around 14, it may be a good time to buy options for protection against potential issues. We think the comments about resolving the TikTok situation are good news for the tech sector. In July 2025, when a similar agreement seemed likely, the Nasdaq 100 index rose almost 3% in just one week. This indicates that traders might consider buying call options on tech stocks that are affected by US-China relations.

Preparing for Outcomes

Despite the hopeful signs, the mention of an “aggressive ask” from China means we should be ready for the possibility of failure. Earlier this year, we saw industrial and agricultural stocks drop sharply when tariff discussions stalled in the spring. It might be wise to hold some protective put options in sectors that are heavily linked to China. History shows that the most likely outcome is another extension of the deadlines. This “kick the can down the road” strategy usually keeps markets within a set range, similar to what we experienced in the second quarter of 2025. Traders who expect this might find it smart to sell options spreads to profit from the lack of movement. Create your live VT Markets account and start trading now.

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