The assassination of Charlie Kirk, a right-wing political activist, took place at a college in Utah. Shots were fired from a roof about 200 meters away. The search for the attackers continues, and two suspects have been released, drawing attention to the case. This incident has influenced the stock market, particularly gun manufacturers like Smith & Wesson and Outdoor Holding Company. Their stock prices went up after the assassination due to speculation about possible stricter gun control measures, which often lead to higher gun sales. Also, the recent murder of Iryna Zarutska, a young Ukrainian refugee on a train, has raised public safety concerns in the U.S. This tragic event has sparked more discussions on gun ownership and increased demand for personal protection. Following the news yesterday, gun manufacturer stocks saw a rise. In the options market, this means the implied volatility for companies like Smith & Wesson is now very high. As a result, buying call options has become costly since the market anticipates a big change. This pattern is familiar and well-documented. After the tragic Orlando nightclub shooting in 2016, Smith & Wesson’s stock surged nearly 7% in one day. The market now expects a similar response due to the high-profile nature of this political assassination. With volatility so high, we see a chance to sell options instead of buying them. We might consider selling out-of-the-money cash-secured puts on these stocks. This strategy allows us to collect a high premium, as fear is inflated. We profit if the stock stays above our chosen strike price when volatility decreases. In the coming weeks, we will closely monitor the FBI’s NICS background check data. In the past, we saw significant increases in this data—an indicator of gun sales—after events like the 2012 Sandy Hook shooting and during the uncertainty of 2020, when checks surpassed 39 million. A similar surge now could support our thesis and potentially boost these stocks further. However, we must recognize that this initial spike is speculative. If political momentum for new laws does not develop, as often happens, these stocks may quickly lose their gains. This “buy the rumor, sell the news” scenario poses a major risk for anyone buying at these inflated prices.

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