Treasury Secretary Bessent highlights that capital markets are booming under President Trump. Companies are taking calculated risks, spending actively, and making business deals in today’s economy. Since June 1st, there’s been a remarkable $1 trillion in mergers and acquisitions (M&A) announced. In August alone, $300 billion in mergers and acquisitions occurred.

Resurgence In M&A Activity

Bessent calls this summer’s M&A activities the busiest since 2021, showing strong market confidence and strategic planning by companies. The rise in capital markets signals that corporations are confident. With $300 billion in mergers announced just in August, companies are investing aggressively like never before. This environment suggests we should focus on strategies that benefit from upward trends and stable volatility. We can expect market volatility to stay low in the upcoming weeks. The CBOE Volatility Index (VIX) has hit yearly lows, recently trading below 14, and this confidence in deal-making should help maintain that level. Selling puts or setting up put credit spreads on key indices like the S&P 500 is a smart way to earn from this stability. This surge in M&A, the highest since the peak in 2021, points to specific opportunities in certain sectors. A lot of this summer’s activity has been centered around technology and energy, in line with trends from the last 18 months. We should consider using call options on mid-cap companies in these sectors that are involved in takeover rumors.

Strategic Investing In A Risk-On Market

The total of $1 trillion in announced deals since June 1 shows we are in a risk-on market. Recent economic data support this, with unemployment steady at 3.7% and slow wage growth giving the Federal Reserve little reason to intervene. We can take advantage of this positive sentiment by adding long positions through index futures. If we look back, this situation reminds us of the M&A-driven markets in 2006 and 2007, which led to high volatility. While the current outlook is bright, it’s wise to use options to manage risk on any long positions. We should be ready to seize opportunities while staying disciplined, as deal-making cycles can change quickly. Create your live VT Markets account and start trading now.

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