Binary events are NOT easy to call or trade with conviction.
Some think they can smell the Trump TACO in the room: “civilization - decimated” talk. Escalate to de-escalate game theory stuff. Not my game.
What I smell are charts, flows & motivations. On Trump’s agenda: THIS WAR IS NOT DONE, so my form read is that volatility is what will stay in the room with us all year.
On positioning ahead of THIS event, here is what I posted to clients:
“Mechanical buyers can step in IF price rises to above the gamma flip level (~6650).
CTAs are modelled to buy USD148bn of global equities over 1 month (USD47bn in the US alone)
Point is: Right-tail risk enters the conversation, again, once we get above - and despite war escalation (and US isolationism) afoot with ground troops deploying to the Middle East for more conflict.
Why? Because upside calls or call spreads in MAG7 names give you the hedge to your downside protection.
I don’t make the rules.
But I can remind a really basic one: Trends need fundamentals for conviction (read: organic) buyers to keep the bullish momentum in play.
Or intervention. Like real, lasting, trusted peace. And what are Vegas odds of that?!”
Real Wars AND Trade Wars
Let’s take a morning look at the “ceasefire” progress. Courtesy @HormuzLetter:
Day one of the US-Iran ceasefire and every side has breached it.
Iran struck Tel Aviv and Beersheba in a post-announcement ballistic missile salvo, then struck Kuwait with a wave of drones from 8 AM local. The Kuwait Army reported 28 drones intercepted and “significant material damage” to oil, power, and water desalination infrastructure. UAE air defenses engaged an Iranian missile barrage. Bahrain downed 31 drones and 6 missiles in 24 hours.
Operations at Abu Dhabi’s Habshan gas complex have been suspended after multiple fires from intercepted attacks injured three people.
Airstrikes hit the Iranian oil refinery on Lavan Island at 10 AM local, causing a fire. Iranian state media frames the Gulf attacks as retaliation for the Lavan strike. Israel’s military confirms a “final wave of strikes” overnight targeting Iranian launching capabilities.
Netanyahu’s office says the ceasefire “does not include Lebanon.” The IDF reports completing the largest wave of strikes against Hezbollah since the conflict began, hitting over 100 targets across Lebanon including Beirut.
Inside the Pentagon, officials were preparing for a massive bombing campaign until Trump suddenly accepted the deal, per Axios. US envoy Steve Witkoff reportedly called Iran’s 10-point proposal “a disaster, a catastrophe.”
Brent crude oil is trading at $95.80/barrel, down nearly 14% on the session, despite the breaches on every side.
Is there a document of agreement or just more words?
From a legal point of view, THERE IS NO CEASEFIRE AGREEMENT.
Daniel Foubert:
These are unilateral, very short, and very vague NON-BINDING bilateral declarations of intent.
A ceasefire agreement in international law requires a written instrument, mutual acceptance of identical terms, a defined scope covering all parties and theaters, verification mechanisms, and consequences for violation. None of those exist here.
What exists is Trump posting on Truth Social that he is suspending bombing. And Iran’s foreign minister posting on X that Iranian armed forces will facilitate passage. Two social media posts, published separately, using different language, describing different things, with no shared document, no signatures, no defined scope — Netanyahu immediately proved the point by carving out Lebanon unilaterally thirty minutes later.
There is no text both sides have agreed to. There is no arbitration mechanism. There is no definition of what constitutes a violation. There is no enforcement body. Pakistan brokered it verbally through phone calls and is not a guarantor. The UN Security Council couldn’t even pass a resolution on Hormuz this week — Russia and China vetoed it.
Iran can close the Strait tomorrow and claim the US violated the conditions first by not rebutting the 10-point plan. The US can resume bombing tomorrow and claim Iran violated the conditions by not fully opening the Strait. Both would be legally unchallenged because there is no agreed standard to challenge against.
Iran reminds this morning:
No oil tanker or ship belonging to the enemies will pass through the Strait of Hormuz before “Israel” commits to a ceasefire in Lebanon.
We have begun a wave of attacks on U.S. allied countries in the region as a warning message to enforce a ceasefire across the entire region, including Lebanon.
As such, we learn this morning:
SAUDI ARABIA’S VITAL EAST-WEST OIL PIPELINE CARRYING CRUDE FROM THE GULF TO THE RED SEA FOR EXPORT HAS BEEN ATTACKED - FT
And while markets gap up on fake ceasefire news... Trump escalates the trade wars on top of real wars!!
Does That Sound Safe?
Now, any country supplying weapons to Iran will be “immediately tariffed on any and all goods sold to the United States of America, 50%, effective immediately.”
Sounds like escalation to me.
A reminder: I called for MARKET STABILIZATION last week into END OF THIS WEEK.
By stabilization I said “6500-6800 SPX” - that’s your range.
It could have gone very badly which is why I recommended you KEEP YOUR HEDGES and buy cheap upside calls/call spreads - or add time and endure the pain, hopefully mindful of my call for higher into EOW before more volatility returns “mid-April to mid-May”. I am on repeat. This is not new information.
Timing is hard, but trading is harder.
Some of you are hurting through the holding, so I wanted to remind that this is but another manipulated headline to frustrate both bulls and bears alike.
Reach out to custom-trade-support for help managing/defending/positioning if you would like. We are all here to help.
My job is to help keep you safe AND on the right side of the trade.
And I hope you are or reach out for help to get there.
Absolutely. Load of shit.