Insights 
VT 
The US and Chinese officials met in Madrid to discuss trade issues, with tariffs and TikTok being key topics. The tariffs truce between the two countries is due to expire on 10 November, and there is a possibility it might be extended if no agreement is reached.
TikTok faces a potential ban in the US. Although the deadline is approaching, it is likely to be extended once again, following previous delays. The US Trade Representative expressed optimism about resolving the TikTok issue while maintaining a positive relationship with China.
US Treasury Secretary’s Remarks
US Treasury Secretary Scott Bessent mentioned Trump’s respect for China’s Xi and noted the aggressive stance of Chinese counterparts. However, he reaffirmed that the US would not compromise on national security. Bessent also indicated that the absence of a TikTok agreement would not affect overall US-China relations.
The positive tone from the Madrid talks should keep market volatility low in the short term. However, we see the November 10 tariff deadline as a major event that will cause swings. With the VIX volatility index currently sitting near 14, it may be a cheap time to buy options to protect against a breakdown in these talks.
We believe the comments about resolving the TikTok issue are a clear positive for the technology sector. Looking back, when similar progress was hinted at in July of 2025, the Nasdaq 100 index gained nearly 3% in a week. This suggests traders could look at call options on tech stocks that are sensitive to Chinese relations.
Preparing for Outcome
Despite the optimism, the mention of an “aggressive ask” from China means we must prepare for failure. We saw earlier this year how industrial and agricultural stocks fell sharply when tariff talks stalled in the spring. Holding some protective put options on sectors with high exposure to China is a sensible hedge.
History suggests the most probable outcome is simply another extension of all deadlines. This “kick the can down the road” approach tends to keep markets trading in a defined range, much like we experienced through the second quarter of 2025. For traders expecting this, selling options spreads to profit from a lack of movement could be a smart strategy.
