Major European stock indices had mixed results. Germany’s DAX fell by 0.34%, France’s CAC dropped by 0.57%, and Italy’s FTSE MIB declined by 0.10%. On the other hand, the UK’s FTSE 100 rose by 0.37%, and Spain’s Ibex increased by 0.21%. In the US, results varied. The Dow industrial average decreased by 20 points, or 0.05%, to 44,154. The S&P 500 rose by 14.15 points, or 0.22%, reaching 6,403.56. Meanwhile, the NASDAQ gained 84 points, or 0.39%, climbing to 21,534. The Russell 2000 increased by 4.93 points, or 0.22%, closing at 2,223.45.

Nvidia and AMD Performance

Nvidia and AMD began the day lower due to a 15% monthly export tax for China but finished positively. Nvidia increased by $1.09, or 0.58%, to $183.77. AMD rose by $3.00, or 1.77%, to $175.84. Other chip stocks also did well. Broadcom climbed by $2.47, or 0.81%, to $307.44. Intel saw a significant rise of $1.16, or 5.81%, reaching $21.11 amid discussions of its CEO potentially visiting the White House. The mixed results in Europe suggest a divided economy, with Germany and France down while the UK and Spain are up. UK stocks have outperformed their Eurozone counterparts for weeks, mainly due to Bank of England data showing inflation cooling faster than expected. Traders might consider pairs trades, going long on the FTSE 100 while shorting the German DAX, to take advantage of this difference. In the US, the disparity between the struggling Dow and the rising NASDAQ points to a continued shift toward growth and technology stocks. This pattern resembles late 2023, when concerns about an industrial slowdown affected cyclical stocks. With the top ten S&P 500 companies now representing over 35% of the index’s weight, options strategies should focus on tech stocks rather than the overall market. The recovery of Nvidia and AMD shares after the news of the export tax shows strong underlying demand and pricing power. The market believes demand can handle these added costs without significantly hurting sales volume. Thus, selling out-of-the-money put options could be a good strategy to collect premium, betting on continued strength.

Intel and Market Volatility

Intel’s significant 5.8% gain from political news introduces high event risk, creating an opportunity for volatility traders. Implied volatility on short-term Intel options has surged to over 85%, indicating uncertainty about the outcome of the CEO’s White House visit. This presents an ideal situation to buy a straddle or a strangle, profiting from large price movements in either direction. While the overall market VIX is calm at 14.5, sector-specific volatility is higher. For instance, the Semiconductor Volatility Index (SOXV) closed at 38 yesterday, showing significant tension in the chip industry. This situation favors derivative strategies that focus on specific company or sector risks rather than broader market indices. Create your live VT Markets account and start trading now.

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