Former President Trump has expressed on Truth Social that The Wall Street Journal misrepresented his views on Iran. The WSJ reported that he considered an attack on Iran but postponed it while evaluating Iran’s nuclear intentions. There’s a lot of uncertainty about Trump’s decision-making, and his supporters are split on whether to engage in another conflict in the Middle East. While some lean toward military action, others worry about getting stuck in a long ground war. Market reactions suggest that investors expect U.S. action: S&P 500 futures fell by 38 points, and oil prices rose by $0.95 to reach $74.45. This indicates market concerns about possible conflict. Overall, traders are clearly reacting to the chance of increased geopolitical tension. They are positioning themselves for potential wider impacts, and the early market trends are unmistakable. A drop in equity futures, especially before the U.S. market opens, usually signals a risk-off attitude among investors. While the decrease in S&P 500 futures is not massive, it shows growing unease—especially when paired with rising crude oil prices. The increase in Brent or WTI prices suggests fears of supply disruptions, even if those concerns are still early. When oil prices go up while stock prices drop, it often means the market is hedging in real-time. The nearly dollar-per-barrel rise doesn’t indicate a long-term disruption yet, but it points to a short-term precaution. This is usually based more on perceptions than on solid disruption data. Still, perceptions drive prices, and price movements are what matter. Given the current situation, traders need to adapt their strategies. News directly affects implied volatility, especially in the energy sector and index options. Increased activity in call options or wider spreads in energy contracts may indicate that traders expect either escalation or short-term price spikes. From our viewpoint, it’s crucial to reassess delta hedging in this context. If you hold near-the-money positions in index options, consider tightening your exposure, particularly if VIX readings start to rise. It’s also wise to review synthetic short positions on oil, as some may be at risk of loss if tensions continue to rise. Above all, monitor how options chains evolve over the next few days. Pay close attention to changes in skew for out-of-the-money puts, which could indicate a growing demand for downside protection. Unwind positions when premium thickness decreases, but don’t assume that will happen right away. The market hasn’t priced in solutions—just possibilities. While some may view the political landscape as unclear, we can only act based on what is observable in pricing, positioning, and realized volatility. These factors will provide more insight than speculation. Right now, only market flows matter.

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