🕒 Market Overview: US-China agreement neutralizes tariff threats, pushing S&P 500 above 6,800 for first time.

🔄 Sector Insight: VIX plunges from October highs to sub-16 levels, crushing put premiums across all sectors.

💰 Today's Trade Idea: FXI bull call spread targets upside potential as capital seeks exposure ahead of formalization.

SMART TRADE IDEA

Bull Call Spread on FXI

Trade Setup:   Buy $42 Call / Sell $50 Call, June 18, 2026 expiration

• Cost: $2.00 ($200 per spread)

• Max Profit:  $6.00 ($600 per spread)

• Breakeven:   $44 on FXI on June 18, 2026

Management Plan:   Exit at 50% loss, roll up, or take profits if FXI’s price reaches $52 before June 18, 2026.

The short leg of the $42-$50 FXI bull call spread is below the technical resistance level at $54.52 per share. Chinese stocks are inexpensive relative to U.S. stocks, and a trade deal between Washington and Beijing could drive capital into the highly liquid FXI Chinese large-cap ETF.

NOTE: Remember, options trading involves substantial risk and is not suitable for all investors. Consider your investment objectives, financial resources, and experience level before implementing this or any options strategy.

DISCLOSURE: Trade recommendations may have changed since publication. Evaluate current market prices and risk/reward before acting. Trading involves significant risk and is not suitable for everyone. This is not personalized investment advice. Past performance doesn't guarantee future results. Publisher and contributors may hold positions in recommended securities. Readers assume full responsibility for their trading decisions. Consult a financial professional before investing.

The U.S. and China are the world’s leading economies. The U.S. depends on China for many raw materials and products, while China depends on the U.S. consumer market. Therefore, it is in the best interest of both countries to reach an agreement on a trade protocol that ends the current standoff. The odds favor a trade deal, as Presidents Trump and Xi would not be meeting unless there is a framework that allows both to claim victory and achieve a win-win result for their countries.

The leading U.S. stock market indices are at record highs, and Chinese stocks remain inexpensive. U.S. and foreign investors are searching for value in equity markets, and China could be the perfect solution. A trade deal would likely increase portfolio exposure to Chinese stocks. The iShares Chinese Large Cap ETF is a diversified product with over 10% exposure to Alibaba (BABA), which is China’s answer to Amazon (AMZN). FXI is a highly liquid ETF. At around $40.70 per share, FXI has over $6.9 billion in assets under management. FXI trades an average of more than 37 million shares daily and charges a  0.74% management fee. The $0.94 dividend translates to a 2.3% yield.

The monthly chart highlights FXI’s bullish trend since the January 2024 higher low. The first technical resistance level is at the February 2021 high of $54.52 per share. The June 18, 2026, FXI $42-$50 vertical bull call spread at $2 has an attractive risk-reward ratio of 1:3.

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