Apple shares experienced a rise in after-hours trading, increasing by over 2%. This came after CEO Cook’s joint appearance with Trump during a series of announcements.<\/p>\n
The revelations from Trump included plans for imposing 100% tariffs on chips and semiconductors. These tariffs have been described as very large and are set to affect the tech industry significantly.<\/p>\n
In light of these developments, Apple’s CEO expressed that the company plans to continue its product manufacturing outside the United States for the foreseeable future. This decision suggests a strategic approach to navigating the new tariff landscape.<\/p>\n
With Apple shares rising after hours despite the news, we are seeing a disconnect between the initial reaction and the fundamental risk. The announcement of 100% tariffs on chips and semiconductors creates massive uncertainty for the entire tech supply chain. This suggests that market volatility is underpriced, and we should prepare for significant price swings.<\/p>\n
We believe traders should consider buying protection against a market downturn. The CBOE Volatility Index (VIX), which measures expected market volatility, closed today near 15, a relatively low figure given the gravity of this news. We see value in buying VIX call options or related volatility products to profit from the turbulence we anticipate in the coming weeks.<\/p>\n
The semiconductor sector itself is the most obvious target for negative pressure. We are looking at buying put options on semiconductor ETFs, such as the VanEck Semiconductor ETF (SMH), to directly short the industry. Looking back to the trade disputes of 2018 and 2019 from our perspective today, chip stocks were among the worst performers whenever new tariffs were announced, a pattern we expect to repeat.<\/p>\n
For Apple (AAPL) specifically, the situation is complicated by the CEO\u2019s statement that manufacturing will remain outside the US. This sets up a potential conflict or a backroom deal, making the stock\u2019s direction hard to predict. A long straddle, which involves buying both a call and a put option, could be an effective strategy to trade the large move that is likely coming, regardless of the direction.<\/p>\n
These tariffs, if they are implemented, will almost certainly increase inflation as the cost of nearly all electronics will rise. The latest Consumer Price Index (CPI) data from July 2025 showed an annual inflation rate of 3.4%, and this policy would add significant upward pressure. We are therefore cautious on consumer discretionary stocks, as higher prices for essential tech could curb spending elsewhere.<\/p>\n
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