The US-China trade talks in Madrid are almost done, says US President Donald Trump. They have reached an agreement on TikTok, a popular app that many young people want to keep. Trump plans to talk with President Xi on Friday. He stressed that the US-China relationship is strong.

Trade Talk Update

The President shared this news on his Truth Social account, supporting a previous news report. While there is no clear decision on tariffs, an agreement about TikTok has been made. The positive vibe from the US-China meeting suggests it’s time to lessen short-term protective measures. We’re seeing implied volatility drop, with the CBOE Volatility Index (VIX) falling below 15 for the first time in weeks. This reminds us of market reactions during trade talks in the late 2010s, where good news often led to quick market jumps. Traders should pay attention to technology, especially the semiconductor sector, which reacts strongly to trade news. The PHLX Semiconductor Index (SOX) usually responds significantly to changes in China policies. Buying short-term call options on major tech-focused ETFs seems like a smart move to take advantage of this upward trend.

Impact On The Social Media Space

The TikTok agreement adds complexity to the social media landscape. If TikTok has a secure future in the US, it will create tougher competition for users and advertising revenue. It may be wise to consider put options or bearish spreads on companies like Meta or Snap, which could feel renewed pressure. We should also pay attention to China-focused ETFs, which have risen following this news. The iShares MSCI China ETF (MCHI) is a good indicator of this positive sentiment. However, because there isn’t a clear decision on tariffs yet, these gains come with fragile optimism. Selling some out-of-the-money puts could be a way to earn premium while being aware that the situation might change. All eyes are now on the upcoming call with President Xi this Friday. This adds a clear trigger for weekly options, as we expect volatility to increase leading up to that call. Any disappointing news from that call could quickly undo today’s positive market reaction. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now