Trump Seeks a Deal Trump is looking to strike a deal with Russia and plans to talk about Ukraine with President Zelenskiy after their meeting. He believes that a deal is possible and has economic tools, like sanctions, to discuss during the meeting. Sanctions are considered strong and may have influenced the meeting’s setup. Trump remains unsure about a quick ceasefire. If the meeting goes well, he intends to call Ukraine’s President Zelenskiy and European leaders to talk about a potential second meeting. If the meeting does not go well, he won’t make those calls. Trump emphasized that Ukraine and Russia are in charge of negotiations. On the topic of China, tariffs block Chinese electric vehicles from entering the US market. Trump also expressed support for Nvidia’s Blackwell chip. The Market Faces Major Risk The upcoming meeting with Russia brings significant risk to the market, leading to potential volatility in trading. With the VIX currently around 19, this is a great time to consider buying straddles or strangles on key indices and ETFs. This strategy bets that the meeting’s outcome—whether a deal is reached or not—will cause a big price change. The goal is to profit from the size of the price movement, regardless of direction, which suits such unpredictable events. We should pay special attention to the energy sector, where the stakes are very high. With WTI crude at about $88 a barrel and European natural gas futures still fluctuating, a successful deal could lower prices, making puts on energy ETFs like XLE appealing. Alternatively, if the meeting fails and more sanctions are threatened, prices could spike, making call options the smarter choice. Comments suggest that a peace deal is a real, though uncertain, possibility, which could lead to a sharp drop in defense stocks. The iShares U.S. Aerospace & Defense ETF (ITA) has risen 12% year-to-date in 2025 due to ongoing geopolitical tensions. We can protect ourselves by buying puts on major defense contractors or the ETF itself, anticipating a “peace outbreak.” In terms of currencies, any sign of a deal that relaxes sanctions would likely boost the Euro against the dollar by easing energy price pressure in Europe. We see a unique chance here, as the market seems to expect a low chance of a breakthrough. Therefore, buying short-dated EUR/USD call options could offer low-cost exposure to a positive surprise from the meeting. This situation reminds us of the weeks before the conflict in early 2022 when implied volatility in energy and agricultural markets spiked before any official actions. We are seeing a similar trend now, with options volume on wheat futures increasing over 20% in the last month. Getting ahead of a big volatility spike is crucial, as premiums will rise as the event approaches. Additionally, the continued strict stance on Chinese EV tariffs, along with support for US chipmakers, strengthens the tech decoupling theme. This suggests a trading strategy of investing in the US semiconductor sector, potentially through call options on the SOXX ETF, while being cautious about industrial sectors heavily linked to the Chinese market. Stable EV tariffs remove uncertainty for the US auto sector, but the focus on US tech leadership appears to be where the momentum is heading. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now