Nvidia has issued a warning about potential legal action if the US government tries to take a share of its revenue. Currently, there are no regulations requiring a 15% revenue share from licensed H20 sales. Government officials have indicated they want this percentage. If the government acts on this, Nvidia may respond with a lawsuit. If geopolitical issues are addressed, Nvidia predicts its H20 revenue will reach between $2 billion and $5 billion in the third quarter, along with more orders. The company also sees a huge rise in AI infrastructure spending, which could hit $3 to $4 trillion by the end of the decade. An industrial revolution is on the horizon, set to change many industries. This shift offers long-term growth opportunities for Nvidia, especially in AI infrastructure. The potential dispute over a 15% revenue share on chip sales could cause short-term volatility for Nvidia. The risk of litigation against the US government creates uncertainty, which traders may take advantage of. We expect volatility to stay high in the upcoming weeks as the market looks for clarity. Traders might want to consider strategies that can benefit from big price moves, such as long straddles or strangles, with expirations in the next 30 to 60 days. The Nasdaq 100 Volatility Index (VXN) rose over 15% in the past month to 29.5, showing sector-wide concern, especially for Nvidia. These strategies can profit whether the government enforces the rule, leading to a price drop, or steps back, causing a relief rally. For those who believe the stock may drop, buying puts can serve as a protection against the government formalizing its revenue expectation. A 15% tax would directly impact earnings from the highly sought-after H20 chip, which analysts expected to boost growth significantly. We have seen similar stock price drops when the US government enforced stricter export controls in October 2023, resulting in a sharp but temporary decline. On the other hand, the long-term view shows a major surge in AI infrastructure development, with spending anticipated to reach trillions by the decade’s end. Recent data from market intelligence firm IDC predicts a 28% annual growth rate for AI-related server spending through 2028. Therefore, if there is a politically driven sell-off, bullish traders might consider selling cash-secured puts at lower strike prices, earning good premiums while preparing for a favorable entry point for a long position. The broader business narrative indicates that we are in the early stages of an AI-driven industrial revolution. Historical examples, like the initial doubt around the internet boom in the late 1990s, suggest that groundbreaking technological trends often prevail over regulatory challenges. It’s crucial to distinguish between immediate political distractions and the long-term growth potential.

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Mexico plans to increase tariffs on imports from China as part of its 2026 budget proposal. This step aims to shield local industries from cheaper competition. The sectors impacted by these tariff hikes include automobiles, textiles, and plastics.

Impact on the Mexican Peso

The proposed tariffs on Chinese products create uncertainty for the Mexican Peso. In the weeks ahead, this likely leads to a bearish outlook for the currency, as markets anticipate potential trade slowdowns. Traders might think about buying put options on the MXN to protect against a possible decline against the U.S. dollar. This development is significant because trade between Mexico and China exceeded $130 billion in 2024. The suggested tariffs could jeopardize this trade flow and may disrupt the nearshoring trend, which has raised foreign investment by over 20% in the first half of 2025. Consequently, broad market index derivatives, such as futures or put options on the iShares MSCI Mexico ETF (EWW), become useful for hedging against an economic downturn. The focus is on sectors like automobiles, textiles, and plastics, meaning companies dependent on Chinese supplies may suffer from reduced profit margins. We expect increased volatility in stocks of Mexican auto parts manufacturers who import parts from China. Short-term bearish strategies, like selling call options to earn premium, could be a good approach for these specific stocks.

Historical Context and Market Strategy

We recall the market’s instability during the US-China trade war of 2018, where initial tariff announcements caused significant swings before the tariffs took effect. The current political discussions surrounding the 2026 budget proposal are likely to create similar volatility driven by headlines. Therefore, strategies that benefit from rising implied volatility, such as purchasing straddles on major Mexican equities, should be considered. The goal is to protect homegrown industries from cheaper competition. Mexican steel and plastics producers that compete with Chinese imports may see their market share and pricing power increase if these tariffs go through. Cautious traders might look into buying long-dated call options on these promising domestic companies, preparing for potential gains once the policy details become clearer. Create your live VT Markets account and start trading now.

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On August 28, 2025, Asian economic data is unlikely to influence the market significantly. Global events are taking priority over local data. Meanwhile, trade tensions are heating up, with the United States proposing a 15–20% minimum tariff on all EU goods. Mexico also plans to raise tariffs on China. In corporate news, Nvidia shared its earnings report, showing an earnings per share (EPS) of $1.05, beating the expected $1.01. However, Nvidia’s stock closed at $181.60, down 0.09%, and fell to $175.39 after hours, a drop of 3.42%.

Market Indices and Cryptocurrency

The S&P 500 and Nasdaq both rose by 0.2%, while the Dow gained 0.3% ahead of Nvidia’s earnings. Solana (SOL) jumped 8% to $209, outperforming Bitcoin, which saw only a 2% increase. Foreign exchange trading remains risky, with high potential for significant losses. Traders should evaluate their risk tolerance and consider seeking expert advice. Relying only on opinions or analyses for decisions is risky, as past performance does not guarantee future results. Despite Nvidia’s strong earnings, the stock declined to nearly $175 in after-hours trading. We believe this positive news is already factored into the tech sector. Unlike the sharp post-earnings rallies of 2023 and 2024, this reversal shows that excessive optimism is now a risk. Traders might think about buying put options on the Nasdaq 100 ETF (QQQ) to protect against a potential tech downturn in the weeks ahead. The renewed discussions of a 15-20% tariff on EU goods and new Mexican tariffs on China pose serious challenges to the market. We have seen similar situations before; during the 2018-2019 trade disputes, the VIX index often spiked above 20 due to tariff news, benefiting those who purchased volatility protection. Buying VIX call options or futures may be wise to prepare for the likely increased volatility from these trade conflicts.

Strategic Concerns and Defensive Positions

The current divergence shows stock indices reaching new highs while currency markets remain unstable. This uncertainty, along with a strengthening US dollar, makes us cautious. If the Dollar Index (DXY) continues to rise above 105, a level it struggled with in late 2024, it could add further pressure to equities and commodities. Given these mixed signals, traders should prioritize capital protection in the coming weeks. The market seems to overlook geopolitical risks, creating a chance for traders to set up defensive positions at a lower cost. Using collar options, where you sell an out-of-the-money call to fund the purchase of a protective put, is a smart strategy for major index holdings like the SPY. Create your live VT Markets account and start trading now.

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Nvidia’s earnings report revealed an adjusted EPS of $1.05, surpassing the expected $1.00. Their revenue hit $46.74 billion, above the forecast of $45.51 billion. However, the forecast for Q3 revenue, projected to be between $52.9 billion and $55.1 billion, fell short of the anticipated $53.46 billion. Nvidia also announced a $60 billion share buyback program. The breakdown of revenue showed that data center earnings were at $41.18 billion, slightly missing the estimate of $41.29 billion. Gaming revenue reached $4.3 billion, which was better than the expected $3.828 billion. On the downside, compute revenue dropped to $33.84 billion, falling short of the projected $35.87 billion.

Nvidia’s Outlook

Importantly, Nvidia’s outlook does not include potential H20 shipments to China, as there were no H20 sales to Chinese customers in the second quarter. These factors, along with missing some revenue targets, may be influencing market sentiment, despite the strong EPS performance. The small earnings beat is overshadowed by a conservative Q3 revenue forecast. This creates tension between past performance and future expectations. We think this could lead to a period where prices stabilize or become more volatile, rather than a clear upward or downward trend in the short term. The revenue shortfall in the data center and compute sectors, along with a cautious outlook that excludes new sales to China, strengthens the case for bearish positions. We’ve seen a rise of over 15% in open interest for puts that expire in late September 2025, indicating that traders are either seeking protection or speculating on a price drop towards key support levels from earlier this summer.

Share Buyback and Market Impact

Conversely, the $60 billion share buyback program acts as a strong safety net for the stock price. A similar situation occurred in 2024 when post-earnings weakness was quickly corrected after the buyback started, benefiting those who sold cash-secured puts. Additionally, the strong gaming revenue reflects resilience in the consumer sector. Given these mixed signals, the best approach might be to focus on volatility itself. Implied volatility for NVDA options has surged to its highest level since the Q1 2025 report, making strategies like long straddles or strangles appealing in the upcoming weeks. With the broader market’s VIX index nearing 18, traders are preparing for a significant move once things settle down. It would be wise to monitor price movements for a few sessions to see if a clear trend develops from this uncertainty. This is especially relevant now that the Federal Reserve has indicated it will pause rate changes, making the market very responsive to growth insights from tech companies like Nvidia. Keep an eye on the volume of out-of-the-money weekly options, as that will be the first sign of how institutions are positioning themselves. Create your live VT Markets account and start trading now.

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Stock Market Performance

On August 27, 2025, the North American trading session showed mixed results in the forex market. The US dollar gained slightly against the euro (+0.09%) but remained steady against the yen. It faced minor losses against the pound (-0.12%), the franc (-0.10%), and the New Zealand dollar (-0.02%). In commodity currencies, the dollar fell by 0.33% against the Canadian dollar and 0.25% against the Australian dollar. Although US yields initially rose, they reversed later with the yield curve steepening. In the US Treasury market, a $70 billion auction of 5-year notes had a high yield of 3.724% with a bid-to-cover ratio of 2.36x. Domestic demand was strong, but international interest was weaker. Crude oil inventories declined significantly, bringing crude oil prices to $64.15, a $0.90 increase. Crude prices bounced back above the 100-hour moving average, signaling a volatile trading environment. In the stock market, US indices made gains, with the S&P hitting a record high for the 19th time this year. Nvidia reported strong revenue growth, but its shares dropped by 4.5% after earnings of $1.08 fell short of expectations. Bitcoin also saw a rise of $215 but remained below important resistance levels. There is a noticeable disconnect between the record-high stock prices and the choppy currency markets. The dollar is having trouble finding direction, which indicates trader uncertainty, even as the S&P 500 closed at a new high. This divergence can often lead to increased volatility, so we should be cautious about chasing this stock rally. Political pressure on the Federal Reserve is a key factor contributing to this tension and will likely influence market movements in the coming weeks. With the CBOE Volatility Index (VIX) sitting near 14.5, which is low given the political situation, purchasing protection seems affordable. We should think about buying VIX call options or out-of-the-money puts on the SPY to hedge against any sharp market reactions related to Fed news after Labor Day.

Yield Curve and Commodity Markets

The yield curve is steepening, now at its widest since early 2022, which signals that the bond market is anticipating higher long-term inflation or growth. We noticed this trend beginning back in 2021. We can take advantage of this by trading yield curve spread futures, betting that the gap between long- and short-term rates will increase. Nvidia’s significant revenue miss is an immediate concern. As a major player in the market, its disappointing results could spread fears throughout the tech sector and dampen overall market sentiment. It’s wise to hedge long positions with puts on the QQQ index right now. In commodities, crude oil shows short-term strength, rebounding off important technical levels due to inventory draws. With WTI crude around $64, which is still below the highs of 2022, buying short-dated call options is a cost-effective way to bet on a rebound toward the $68-$70 range. This is a tactical play based on current momentum. Gold trading near $3,400 an ounce reflects investors’ desire for safety from inflation and political instability. This reinforces our long volatility position. We should keep or expand our long positions via GLD calls or gold futures to guard against a weaker dollar or sudden market shifts. The dollar’s weakness against commodity currencies like the Canadian and Australian dollars is linked to the recent rise in oil prices. This trend may continue as oil prices climb. We can express this view by buying calls on currency ETFs like FXC or by shorting the USD/CAD pair. Create your live VT Markets account and start trading now.

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European stock indices finished the day higher, while major US indices changed only slightly. The Dow Jones Industrial Average rose by 146.98 points, or 0.32%, closing at 45,565.05. The S&P 500 also set a new record high for the 19th time this year, gaining 15.46 points, or 0.24%, to reach 6,481.40. The NASDAQ index increased by 45.87 points, or 0.21%, closing at 21,590.14. Nvidia is set to announce its earnings at 4:20 PM ET, with shares dropping by $0.26, or -0.14%, to $181.51. Analysts expect earnings per share of $1, compared to last year’s $0.68, which is a 47% increase. Projected revenues are $46.05 billion, rising from $30.04 billion last year, reflecting a 53% increase. However, there are worries about the pace of growth, despite the stock’s price jumping 35.17% this year.

Nvidia’s Impact on Market

In after-hours trading before Nvidia’s earnings release, Snowflake shared its Q2 2026 results, reporting earnings per share of $0.35, surpassing expectations of $0.27. Revenue reached $1.10 billion, exceeding the expected $1.08 billion, leading to a 12.48% rise in shares. CrowdStrike, on the other hand, reported Q2 2025 results with earnings per share of $0.93 (against an expected $0.83) and revenue of $1.17 billion, slightly above the $1.15 billion estimate. However, its shares dropped 7.9% in after-hours trading. With the S&P 500 reaching its 19th record high for 2025, the market remains strong. Yet, the CBOE Volatility Index, or VIX, is around 14, indicating a lot of calmness among investors. This mix of record highs with low fear suggests that portfolios might be at risk for sudden dips. Everyone is focused on Nvidia’s earnings as its results are crucial for the whole market. Revenue is expected to exceed 50% growth compared to the same quarter in 2024, setting a high standard. With Nvidia stock already up 35% this year, just meeting earnings expectations may not satisfy investors. In the options market, traders anticipate a potential stock move of nearly 10% in either direction for Nvidia after the earnings report. This has driven implied volatility to very high levels, which makes simple bets expensive. This volatility premium is expected to disappear quickly after the earnings numbers are announced, in a process known as “IV crush.”

Market Caution

The drop in CrowdStrike’s stock, despite beating earnings and revenue estimates, serves as a significant warning. It shows that the market punishes anything less than outstanding performance, a trend seen repeatedly with high-valuation growth stocks over the past year. Since Nvidia accounts for over 6% of the S&P 500, any negative surprises could significantly impact the entire index. It may be wise to buy short-term puts on the SPY or QQQ as a cost-effective way to protect against a potential tech-led market pullback in the upcoming weeks. Create your live VT Markets account and start trading now.

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The EURUSD currency pair has seen significant ups and downs. In early U.S. trading, it dipped below the range of 1.1581 to 1.15885 but quickly bounced back. This typical summer trading behavior led to a price reversal. The recovery went beyond the halfway point of July’s range, peaking at 1.16098. After that, it approached the 100-hour moving average at 1.16415, where sellers stepped in, causing the price to drop. The 100-hour moving average is now a resistance level; if the price exceeds this, attention will shift to the 200-hour moving average at 1.16531.

Current Trading Dynamics

If the price drops below the 50% midpoint at 1.16098, it could encourage sellers and push the EURUSD back toward earlier lows. Currently, the currency shows erratic and uncertain trading patterns typical of late summer. It’s important to stay flexible and alert to market changes during this time. The EURUSD struggles with its 100-hour moving average around 1.1641, reflecting the market’s indecisiveness. Sharp price reversals are common in late August as trading volume decreases before September. Traders should expect this choppy action to continue soon. This price movement occurs amid mixed economic signals. The latest U.S. jobs report from early August 2025 showed a solid but not outstanding gain of 190,000 jobs, allowing the Federal Reserve to pause its tightening cycle. Meanwhile, Eurozone core inflation for July 2025 remained stubbornly high at 3.1%, putting the European Central Bank in a tough spot.

Central Bank Divergence

The difference between central banks is keeping the currency pair tightly bound between key technical levels. For derivative traders, selling volatility might be a suitable short-term strategy. We see traders using iron condors, betting that the pair will stay between roughly 1.1550 and 1.1700 over the next week or two. However, this tight trading range often signals an upcoming breakout. One-month implied volatility for EURUSD is around 8.5%, which is high but not extreme, making long volatility positions appealing. We think buying straddles or strangles might be profitable, as it allows traders to benefit from a significant move after holiday trading ends and institutional volume returns. Reflecting on similar market conditions, we remember the low-volume summer trading of 2023, which also showed long periods of range-bound activity before a price shift in the fall. For now, we will use the 50% level at 1.16098 as our key pivot point. If the price breaks below this level, we may consider adding bearish positions. Alternatively, a strong move above the 200-hour moving average at 1.16531 would indicate that bulls are gaining control. Create your live VT Markets account and start trading now.

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The price of WTI crude oil has reached $64.15, up by $0.90 or 1.42%. Today, the price hit a high of $64.23 and a low of $62.95, closing close to the high. Earlier, the price fell below its 200-hour moving average for the first time since August 21. However, it managed to settle above the 100-hour moving average, which stands at $63.74. An unexpected drop in oil supply of 2.4 million barrels, compared to the expected 1.863 million, helped boost prices. Gasoline inventories also saw a decline of 1.236 million barrels.

Bullish Signal from Inventory Drawdown

Today’s price movements, combined with the surprising inventory drawdown, send a bullish signal. The market is using up supply faster than expected, indicating strong demand. This environment supports the idea that prices could rise in the near future. Positive sentiment is further fueled by recent economic data and upcoming seasonal risks. The US Services PMI for August exceeded expectations at 54.1, and with Tropical Storm Leo forming in the Gulf of Mexico, we see potential for both strong demand and supply interruptions. Such factors often bring increased volatility and upward pressure on prices as we move into September. Looking back, we observed a pattern of significant summer inventory draws that led to price increases into autumn 2023. This historical trend suggests we might be on the verge of a similar seasonal trend, rather than just a one-off situation. The steady inventory draws, especially last week’s larger drop, indicate a tightening market that traders should pay attention to.

Strategies for Potential Upside

Given this context, we’re exploring strategies that could benefit from a potential price increase in the coming weeks. One option is to buy out-of-the-money call options, like the October $67.50 contracts. This approach allows us to take advantage of potential gains while managing risk. We will keep an eye on the 100-hour moving average at $63.74 as a key support level for our positions. Create your live VT Markets account and start trading now.

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AUDUSD has bounced back from earlier losses, now trading above the 200-bar moving average on the 4-hour chart at 0.65056. It also moved past this week’s earlier swing highs around 0.6504. Holding these levels might lead to further upward movement. The market trend is unpredictable and shows significant fluctuations. Earlier, the pair dropped below the 100-day moving average at approximately 0.6471 but quickly rebounded, indicating a shift from selling to buying. This pattern might repeat itself.

Key Level Analysis

The 0.6504–0.6500 area is crucial right now. Staying above this zone suggests a positive trend, but dropping below 0.6500 could quickly switch sentiment from buying to selling. This highlights the recent range-bound trading nature. Considering the market’s erratic behavior, we see this as a chance for range-trading strategies using options. The 0.6500 level serves as a key pivot, making it sensible to consider selling strangles or iron condors with break-even points that fall outside the 0.6470-0.6530 range. This strategy benefits from the price remaining steady and time decay over the upcoming weeks. We’ve witnessed similar patterns, especially when central bank messages are mixed. The Reserve Bank of Australia’s meeting on August 5th, 2025, kept rates steady but indicated possible future hikes. Meanwhile, last week’s Fed minutes showed differing views on policy direction. This fundamental uncertainty is a major factor in the pair’s struggle for a clear trend, reminiscent of the sideways markets noted in late 2023.

Directional Bias Strategies

For those with a directional outlook, the 0.6500 area serves as an entry trigger. If the price holds above this level for a while, buying call spreads to target higher resistance limits risk in case of a sudden market reversal, as seen earlier this week. Additionally, Australia’s unemployment rate recently fell to 4.0%, giving a bullish tendency if the dollar weakens. However, a solid break under 0.6500 would suggest sellers are taking control. In this case, buying put options or starting put spreads can provide a defined-risk approach to play for a retest of the 100-day moving average around 0.6471. Added concerns about fluctuating iron ore prices, which have dropped more than 10% this month, and weaker Chinese manufacturing data add to this cautious outlook. Create your live VT Markets account and start trading now.

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The U.S. Treasury recently held an auction for $70 billion in 5-year notes, with a top yield of 3.724%. At the time, the yield was at 3.717%, resulting in a tail of 0.7 basis points. This is larger than the six-month average of -0.1 basis points. The bid-to-cover ratio was 2.36, slightly lower than the six-month average of 2.37. Domestic buyers made up 30.74% of the bids, much higher than their six-month average of 19.4%. Meanwhile, international buyers’ participation fell to 60.5%, down from an average of 69.3%.

Dealers And Domestic Participation

Dealers received 8.8% of the notes, below the six-month average of 11.2%. The auction received a grade of B-, largely because of the significant tail. However, more domestic participation was a positive sign. The auction showed some weakness, closing with a higher yield of 3.724% than expected. This indicates that the Treasury needed to offer a better yield to attract buyers, which may suggest that yields could rise in the near future. This is a warning for anyone holding long positions in bond futures. A key point from the auction is the change in U.S. debt buyers. We noticed a drop in foreign interest but a major rise in domestic buyers. This shift implies that U.S. funds find current yields appealing, which might help stabilize bond prices and limit further rises in yields. This aligns with trends observed throughout the summer of 2025, where uncertainty about the Federal Reserve’s next actions has kept markets anxious. The last report from July 2025 still showed core inflation at a stubborn 3.5%, making it unlikely for the Fed to hint at rate cuts soon. Therefore, strategies may be needed to benefit from high short-term rates.

Impact On US Dollar And Trading Strategies

The decrease in foreign demand for U.S. bonds could put pressure on the U.S. dollar. If fewer international buyers need dollars to purchase U.S. debt, the currency may weaken. Traders might consider options on currency ETFs to bet on a possible decline in the dollar against the euro, especially since the European Central Bank seems more aggressive in tackling inflation. For equity derivative traders, persistently high yields are a worry, similar to what happened in 2022-2023 when rising rates affected stock valuations. This situation calls for protective strategies, such as buying put options on the Nasdaq 100 index. The technology sector and other growth-driven areas are particularly sensitive to higher borrowing costs. The mixed signals from this auction—weak overall demand but strong domestic participation—could lead to uneven market movements. This suggests that volatility might be a good opportunity for trading. Implementing straddles or strangles on interest rate futures could effectively capitalize on price shifts in either direction in the coming weeks. Create your live VT Markets account and start trading now.

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