Markets experienced a relief as stocks recovered following Donald Trump’s speech, where he clarified there would be no military action to take Greenland. This comment reduced concerns about a potential Western alliance breakdown, leading to a rally in stocks and a decrease in the VIX.
Despite the EU parliament halting work on the US trade deal, the lessened likelihood of a US-EU trade conflict facilitated a more positive market atmosphere. This optimism aided Netflix in recovering losses after its recent earnings report, with shares testing the $80 level last seen in April.
Questioning If Bargain Hunters Will Step In
As Netflix shares trade at a lower valuation than six months ago, questions arise whether bargain hunters will step in. The rebound in risk appetite has been noted, showcasing a shift in market sentiment after Trump’s reassuring statement.
We remember the relief rally in mid-2025 when the former President backed down from talk of seizing Greenland. That event sent the VIX plummeting below 15 for the first time in months, showing how sensitive markets were to geopolitical de-escalation. This established a pattern of sharp volatility spikes followed by quick reversals, a theme we must watch for in the coming weeks.
The fears of a full-blown US-EU trade war, which seemed so real in 2025, have also largely faded. With the revised Transatlantic Trade and Investment Partnership now in effect, recent data from Eurostat shows a 5% increase in U.S. imports for the last quarter of 2025. This stability suggests selling out-of-the-money puts on broad market ETFs like SPY is a viable strategy for collecting premium.
Netflix Stock Performance
We also saw how Netflix found a floor around that $80 level back in April 2025, which rewarded bargain hunters. The stock has since climbed to over $140 after their Q4 2025 earnings report showed subscriber growth beating estimates by over 2 million. Traders with a bullish outlook could consider buying call spreads to capitalize on further momentum while defining their risk.
The key takeaway from the 2025 geopolitical flare-ups was how quickly implied volatility can collapse on any sign of resolution. With the VIX currently hovering near a low of 13, buying long-dated, out-of-the-money puts on major indices offers a cheap hedging strategy. This provides cost-effective insurance against any sudden return of the tensions we saw last year.
