Nvidia and AMD could be required to send 15% of their chip sales in China to the US government, according to a report from the Financial Times. Other news sources have not been able to confirm this claim. US equity index futures will open at 6 PM Eastern time, and sales to China may influence these stocks. The possible new payments could negatively affect the companies’ finances.

Impact On Market Volatility

Due to the uncertain nature of this report, we are seeing changes in expected market volatility. This uncertainty signals traders to think about strategies that could profit from market price changes, no matter which way they go. Buying straddles or strangles on Nvidia and AMD could be a smart move in the coming days. The stakes are high because a 15% charge would significantly impact earnings for both companies. In the second quarter of 2025, reports indicated that China made up about 19% of Nvidia’s data center revenue and 22% of AMD’s total sales. This news introduces a big, measurable risk for two key stocks in the market. The options market is already responding to this potential issue. Implied volatility on weekly options for Nvidia and AMD has risen over 25%, according to overnight trading data. This indicates that traders are expecting a much larger price swing than usual before the week ends.

Strategies For Traders

For those who think the reports will be confirmed, buying put options or setting up bear put spreads can allow them to profit from a possible sharp decline. A loss of a fifth of their revenue would likely push these stocks below their recent support levels. A similar situation occurred in early 2024 with export restrictions, causing a temporary 10% drop in AMD before more details were released. On the other hand, if you believe this is just a baseless rumor, buying call options is a smart strategy. A quick and official denial from the companies or the US government would likely lead to a relief rally, punishing short-sellers and benefiting those who are ready for a quick rebound. In the end, this situation presents a binary event where the outcome is still unknown. Traders should brace for rapid changes once US markets open and officials begin to comment. Until there is confirmation, expect higher option premiums for both companies. Create your live VT Markets account and start trading now.

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