South Korean President Lee Jae-myung will visit the United States from August 24 to August 26. This is his first summit with US President Donald Trump. The two leaders will meet on August 25 in Washington. They plan to discuss how to strengthen the strategic alliance between South Korea and the United States.

Deepening Cooperation on Economic Security

They will also look at ways to enhance cooperation on economic security. The goal of this visit is to strengthen the relationship between the two countries. With the upcoming summit, market uncertainty is rising. Derivative traders should get ready for increased volatility in South Korean assets over the next two weeks. The KOSPI 200 Volatility Index (VKOSPI) has risen 8% this month to 19.5, showing signs of market anxiety. The outcome of the summit will affect the Korean won, so we are closely monitoring currency markets. Traders will likely buy options to safeguard against or take advantage of sudden changes in the USD/KRW exchange rate. We have seen similar swings in currency during past trade negotiations in the late 2010s when a single statement could cause significant shifts.

Spotlight on Semiconductor and EV Industries

Economic security talks will focus particularly on the semiconductor sector. Recent data showed that South Korea’s chip exports to the US increased by 9% last quarter. This trend could either be strengthened or jeopardized by the discussions. Traders may buy call options on major tech companies like SK Hynix, anticipating positive announcements on supply chain collaboration. The electric vehicle (EV) and battery industry is another area of interest, especially with ongoing debates about US trade policy. Uncertainty around future EV tax credits has already caused LG Energy Solution shares to drop by 6% since July. We expect more demand for put options on these stocks as a protective measure against any protectionist comments from the summit. Discussions regarding the strategic alliance will likely include defense cost-sharing, which has been a historically divisive issue. A negative outcome here could weaken investor sentiment and impact the KOSPI index. This suggests that buying protective put options on broad market ETFs is a wise strategy for those heavily invested in South Korean equities. Create your live VT Markets account and start trading now.

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