Nvidia shares experienced a slight decline following the recent earnings report. The company’s CEO, Jensen Huang, mentioned ongoing discussions with the US government concerning the sale of Blackwell chips to China, which could be a lengthy process.
Huang suggested that the national security narrative might be a means for former President Trump to pursue his preferred actions. Nvidia is willing to pay the US for the permission to sell their chips in the Chinese market.
Market Uncertainty
The slight drop in Nvidia shares shows the market is uncertain how to price this new political variable. The key takeaway is that a path to resuming sales of top chips to China is now on the table, which wasn’t the case before. This introduces a huge binary risk over the coming weeks, depending on the outcome of these talks.
This uncertainty is being reflected directly in the options market, where we are seeing 30-day implied volatility for NVDA spike to over 65%. This is a significant jump from the post-earnings calm we expected. Traders should interpret this as the market pricing in a large stock price swing, we just don’t know the direction yet.
The stakes are enormous, which justifies the volatility. We estimate that a full reopening of the China market for Blackwell chips could add over $15 billion to Nvidia’s annual revenue. Conversely, a flat-out rejection from the administration could easily knock 10% off the stock price as that hope evaporates.
Strategic Trading Approach
We have seen this playbook before with the current administration. A similar situation arose with Apple in April 2025, where tariff exemptions were granted after direct negotiations and commitments to US investment. Looking further back to 2023, regulatory tightening from the previous administration caused a 15% swing in the stock, showing how sensitive Nvidia is to this exact issue.
Therefore, the straightforward trade is to buy volatility through structures like straddles or strangles with October or November 2025 expirations. This allows us to profit from a significant price move in either direction, whether a deal is announced or definitively rejected. The goal is to capture the move before this elevated volatility premium collapses.
