On Sunday morning, Trump talked about the ongoing conflict between Israel and Iran. He said that the US is not involved right now but pointed out that future involvement is possible. He confirmed there is currently no engagement from the US. Later that day, Trump stressed the US’s continued support for Israel. His remarks indicate that the US stance might change based on how the situation evolves.

Possible Change in US Position

Trump’s comments suggest the US may alter its current position as events unfold in the region. While there is no direct involvement at this time, his support for Israel indicates a willingness to act if the situation changes significantly. This opens up various options for military or diplomatic responses. Although the US is not involved now, an escalation in regional tensions or increased domestic pressure could lead to a different approach. For derivatives traders, this situation creates uncertainty for the week ahead. The market may not yet reflect the risks outlined by Trump’s statements. Historically, markets quickly react when words turn into actions, so there could be new opportunities for trading as responses to headlines emerge. There may be mispricing in energy and defense sectors during this time, which means adjustments are likely. Past geopolitical events provide examples. A small military incident can lead to a swift drop in risk assets before any policy changes occur. Similarly, options markets often take time to adjust, so traders who use leverage or short-term bets should reevaluate their positions. Any escalation, whether planned or accidental, could impact short-term valuations.

Watching News and Military Updates

Trump’s statements clearly show a leaning toward support, not a neutral stance, even without direct action. This signal requires careful monitoring of news and military updates. Changes might affect areas beyond the immediate region, as geopolitical tensions usually impact related asset classes, like commodities and safe-haven currencies. We believe that shifts in how traders view implied volatility will likely begin with energy price futures options and then extend to other areas. Reactions may start during the Asia trading session, depending on any new developments. Weekend news can disrupt illiquid markets, presenting opportunities for those who can act quickly before European markets open. Additionally, it is wise to anticipate more strategies focused on protecting against interest rate changes and commodity-linked indexes. This situation isn’t just about reducing risk; it could lead to selective buying and trading opportunities in different regions, especially where central banks are about to make decisions. This is the time to focus on price spreads, not just levels. In summary, while the shift in Trump’s comments doesn’t mean immediate action, it does require close attention to market movements and early positioning before broader consensus and pricing adjustments occur. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now