Nvidia shares faced a small drop after the latest earnings report. CEO Jensen Huang talked about ongoing talks with the US government about selling Blackwell chips to China, a process that might take a while. Huang hinted that the national security issue could be a way for former President Trump to act on his preferences. Nvidia is ready to pay the US for permission to sell chips in China.

Market Uncertainty

The small decline in Nvidia shares indicates that the market is unsure how to react to this new political factor. A key takeaway is that there’s a possibility of resuming sales of top chips to China, which wasn’t considered before. This creates significant risk in the coming weeks, depending on how these discussions turn out. This uncertainty is also showing up in the options market, where the 30-day implied volatility for NVDA surged to over 65%. This is a big jump from the calm we expected after earnings. Traders should see this as the market anticipating a substantial swing in the stock price, but it’s unclear which way it will go. The stakes are high, making the volatility reasonable. We believe that fully reopening the China market for Blackwell chips could add over $15 billion to Nvidia’s yearly revenue. On the flip side, a complete rejection from the government could easily cause a 10% drop in the stock price as those hopes fade away.

Strategic Trading Approach

We’ve seen this scenario play out before with the current administration. A similar case happened with Apple in April 2025, where tariff exemptions followed direct talks and promises for US investments. Looking back to 2023, regulatory tightening from the previous administration caused a 15% shift in Apple’s stock, highlighting how sensitive Nvidia is to this issue. Therefore, the best approach is to buy volatility using strategies like straddles or strangles with October or November 2025 expiration dates. This way, we can benefit from a significant price movement, no matter if a deal is made or rejected. The goal is to take advantage of these price swings before the heightened volatility premium disappears. Create your live VT Markets account and start trading now.

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