Donald Trump mentioned that he believes a deal might have been reached with South Korea. This development could potentially be a positive outcome.
However, it remains uncertain if anyone within the administration can confirm the agreement’s completion. Clarity would benefit both sides involved.
Headline Risk and Market Reactions
It appears we are dealing with headline risk, where the market reacts to the possibility of a deal, not the certainty. This uncertainty is causing a notable spike in implied volatility on South Korean assets, making options more expensive than they were last week. We’re seeing the KOSPI 200 Volatility Index, which had been trending down, jump nearly 12% this morning on the news.
For traders who believe a formal, positive announcement is coming, now is the time to consider buying call options. The iShares MSCI South Korea ETF (EWY) is the most straightforward play, but look also at options on automakers like Hyundai, as their export costs are at the heart of any potential trade agreement. This comes as South Korea’s July 2025 export data showed a 2% year-over-year increase, a figure that a new deal could substantially boost.
However, we remember from the 2017-2021 period how often these “almost done” deals could fall apart or get delayed, causing sharp reversals. Skeptical traders might see the inflated premiums as an opportunity to sell options, betting that the eventual price move won’t justify the current level of fear and greed.
Strategies for Traders
Buying puts offers a direct way to profit if the administration walks back the statement or the deal is less favorable than hoped.
