Insights 
VT 
The Dow Jones Industrial Average increased by over 200 points on Friday amidst an uncertain market week. The implementation of US President Donald Trump’s much-anticipated tariffs has prompted mixed reactions, with markets uncertain about the future impact.
Despite nearing record highs recently, the Dow Jones struggles to sustain strong upward movement, hovering near 44,000. A technical support level is found at the 50-day EMA above 43,700, while the RSI remains neutral around 50.00.
Trump’s Tariff Policy
Trump’s tariff policy includes a proposed 100% tariff on imported semiconductor microchips, which may be waived for companies manufacturing in the US. Tech companies, led by Apple, have pledged future investments in US manufacturing, with Apple’s stock rising by 4.5% on Friday.
Gold prices reached over $3,400 per ounce following reports of potential tariffs on imported Gold bars. The impact on pre-tariff sales occurring between April and August is also being assessed.
The Consumer Price Index, released monthly, reflects inflation trends and purchasing behaviour. The Federal Reserve prioritises maintaining price stability and full employment, targeting an inflation rate of 2% YoY. Supply-chain issues have pushed CPI figures to multi-decade highs, prompting the Fed to consider aggressive measures.
Stalling Dow Jones and Market Uncertainty
With the Dow Jones stalling near 44,000 and the Relative Strength Index sitting at a neutral 50, the market is signaling major uncertainty. We should consider strategies that profit from a potential spike in volatility, such as buying call options on the VIX. We saw the VIX jump over 40% in a single week during similar trade disputes back in 2018, and the current conditions feel very familiar.
The proposed 100% tariff on semiconductor microchips creates a clear divergence in the tech sector. We see an opportunity in pairs trading, buying call options on companies with significant US manufacturing operations while buying put options on firms heavily reliant on Asian imports. Recent industry reports for Q2 2025 already show a 15% increase in capital spending for US-based fabricators, confirming this trend is underway.
Apple’s 4.5% stock jump on its investment pledge seems overly optimistic for the short term. Shifting a supply chain of that magnitude takes years, as we know from logistics reports in 2024 that showed over 90% of its key product assembly was still centered in China. We can use this situation to sell covered calls against Apple stock, generating income from the inflated premium while we wait for a more realistic timeline to emerge.
Gold’s surge past $3,400 an ounce is a direct reaction to tariff fears and high inflation. We should ride this momentum by purchasing call options on gold futures or ETFs, as consumer sentiment surveys from July 2025 show inflation is now the number one concern for households. However, we must watch the U.S. Dollar Index, which has also strengthened to a 12-month high of 107, as a strong dollar could eventually limit gold’s upside.
The high CPI reading puts immense pressure on the Federal Reserve to act aggressively. The probability of a 50-basis-point interest rate hike at the September 2025 meeting has now jumped to over 85%, according to the latest CME FedWatch tool data. We should therefore buy protective put options on rate-sensitive sectors like real estate investment trusts (REITs) and high-growth tech stocks that are vulnerable to tighter monetary policy.
