US President Donald Trump said on Tuesday that the US may restart attacks on Iran, but said he has not decided. He made the comments to reporters at the White House.
He said, “We may have to give Iran another hit, but I’m not sure,” and claimed that “Iran is begging to make a deal.”
Trump also referred to Cuba, saying, “I don’t know about changing the regime in Cuba.” He added, “Cuba really needs help.”
Trading The Uncertainty
The president’s conflicting statements introduce significant uncertainty, which is something we can trade on. The key is to prepare for a spike in market volatility, as the talk of military action clashes directly with the possibility of a diplomatic deal. This means options pricing is likely to increase across several key sectors in the coming weeks.
We see the most immediate impact in the energy markets, specifically WTI and Brent crude futures. With nearly 20% of the world’s oil still passing through the Strait of Hormuz, any hint of conflict could send prices soaring towards $100 a barrel, a level we haven’t seen since the supply shocks of 2025. Buying out-of-the-money call options on crude oil for the next 30 to 60 days is a direct way to position for this potential escalation.
This kind of geopolitical risk will almost certainly move the CBOE Volatility Index, or VIX, which is currently trading at a relatively calm level of 13. We expect a jump in the VIX, making now an opportune time to buy VIX call options or futures to hedge against a broader market downturn. Looking back at similar tensions in 2025, the VIX saw a 40% spike in a single week.
For those managing equity portfolios, this is a clear signal to purchase protective put options on major indices like the S&P 500. The mixed messages from the White House could easily trigger a risk-off sentiment, causing a quick drop in the market. A sudden military strike could see the market test the lows we experienced earlier this year.
We are also watching safe-haven assets, particularly gold, which is already holding firm above $2,400 an ounce. These comments will likely provide another tailwind, pushing it toward new highs as investors seek shelter from the uncertainty. Call options on gold-backed ETFs offer a leveraged way to bet on this flight to safety.
Positioning For Volatility Crush
Conversely, the “begging to make a deal” comment suggests this tension could evaporate quickly, causing a volatility crush where option premiums collapse. This makes strategies like vertical spreads attractive, as they define our risk if a peaceful resolution suddenly emerges. By selling a higher-strike call against a purchased call in the energy sector, for example, we can limit our downside if the situation de-escalates.
