The United States is set to wrap up trade talks with countries that don’t have formal agreements by the end of October. This announcement was made by Treasury Secretary Scott Bessent in an interview with Nikkei Asia.

Key Partners Involved

Current discussions involve important partners like Canada, Mexico, and Switzerland. These nations want to secure better deals to lessen the impact of new US tariffs and keep their access to the US market. In some cases, the US is using tariffs as a negotiation tool to gain leverage on issues not related to trade. With the deadline for these trade talks fast approaching, we can expect increased market uncertainty. This uncertainty is likely to boost implied volatility, especially in options contracts linked to the affected markets. We saw this trend during the 2018-2019 trade disputes when the VIX index frequently rose above 20 as tariff deadlines came closer. The currencies of countries still negotiating, particularly the Canadian dollar and Mexican peso, are now facing added uncertainty. Traders should think about using options to protect against or profit from sharp movements in currency pairs like USD/CAD and USD/MXN. During the last major trade renegotiation in 2018, the Mexican peso experienced weekly fluctuations over 2%, a level of volatility that could easily return in the near future. We should also pay attention to equity sectors that are vulnerable to tariff risks, such as industrials and materials. Buying put options on ETFs that track these sectors, like the Industrial Select Sector SPDR Fund (XLI), could be a useful protection against potential negative outcomes from the negotiations. The latest jobs report from July 2025 showed a minor slowdown in manufacturing employment, indicating that these sectors are already sensitive to further economic pressures.

Opportunities in the Options Market

For those anticipating volatility but unsure of the direction, option spreads provide a way to trade the news with defined risk. A long straddle on a broad index purchased now could yield profits from substantial market swings, whether a deal is struck or talks fall apart. The key is to enter these positions before implied volatility increases too much, making them pricier. Switzerland’s involvement adds a “safe haven” dynamic for traders to consider. If global risk appetite declines due to these trade discussions, we might see money flow into the Swiss franc for safety, causing it to appreciate. Therefore, call options on the franc could serve as a good hedge against broader market chaos resulting from a breakdown in US negotiations. Create your live VT Markets account and start trading now.

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