Fox Business News reports that a potential U.S. strike on Iran could happen by the weekend. This information comes from sources close to the White House. Meanwhile, the White House Situation Room is holding a meeting to discuss the situation. Tensions between the U.S. and Iran are rising. The possibility of a military operation is being taken seriously, making it feel more real than earlier threats. For those involved in derivative markets, we need to react to the changing behavior of volatility measures and short-term hedging tools. When events create uncertainty, implied volatility in options usually responds quickly, often before the actual market moves. We’ve seen this in the past during military escalations—prices start to react before any official action occurs, as they factor in the risk. The urgent meeting at the White House suggests that decisions are progressing beyond initial evaluations. Such high-level discussions typically increase trader sensitivity and can lead to broader reactions in energy assets, defense stocks, and volatility indices. A key concern is how this tension affects current market positions. If implied volatility stays low despite political turmoil, it may indicate disbelief in the threat or a lack of adjustments—conditions that can change if action is taken. When the likelihood shifts, prices will follow. While it’s tough to predict the sequence of events accurately, it’s better to act early to guard against negative surprises. It’s also important to observe how traders structure new trades in the coming sessions. Look for increased activity in short-term options related to oil and index ETFs, especially those with favorable payoffs that provide protection or potential gains. In these situations, delta hedging can lead to sharp and unpredictable moves, affecting short-term fluctuations regardless of overall market trends. While markets are familiar with military risk, they react to it unevenly. Short-dated contracts can provide valuable insights. Keep an eye on skew adjustments; if we see quickly rising premiums on downside options for equity indices or high demand for upside in defense stocks, it signals that a shift in pricing might already be happening. Though we can’t predict the exact outcome, the aim is not to guess intentions but to structure our positions to respond well to surprises. In this case, it’s better to be early than clever.

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