To The Moon

The war between Israel and Iran has raised fears that crude oil export infrastructure could be the target of an attack, which could curb supply and trigger prices to soar. Brent crude prices were close to $76 a barrel on Wednesday, having previously hit a new high since the conflict broke out in January. People are also increasingly worried that the war may have a huge impact on U.S. stocks.

According to American Broadcasting Corporation (ABC),U.S. officials said the next 24 to 48 hours will be critical in deciding whether the Israel-Iran issue can be resolved diplomatically or whether Trump will take military action.

Trump gathered his top advisers in the White House Situation Room on Tuesday. Before the meeting, Trump greatly increased his rhetoric against Iranian power, claiming that the United States clearly knew Khamenei's hiding place.

According to several officials involved in the diplomatic process,Despite the apparent sword and crossbow, U.S. negotiators on Tuesday argued that Iran was in a weak position and could be forced to return to the negotiating table and finally accept a deal that would require Iran to abandon all nuclear enrichment activities。

The Iranian regime has expressed its willingness to resume discussions with the United States amid the confrontation between Iran and Israel, the officials said, adding that,The Trump administration has been seeking more concrete commitments before abandoning the path of war.

If Iran returns to talks and agrees to abandon uranium enrichment, U.S. officials believe a potential high-level meeting led by Special Envoy Steve Witkoff and Vice President JD Vance will take place as soon as this week.

But such a situation may require Iran to act quickly. Trump has admitted that his patience with the situation in the Middle East is running out.

The stock market is at an all-time high, and there are uneasy factors behind the market prosperity: the conflict between Israel and Iran continues to escalate, and any contingency of military action can trigger a dramatic market turmoil. Against this backdrop of increasing uncertainty, investors should introduce confrontation strategies as appropriate to protect investment portfolios from systemic risk shocks.

1. Offset option strategy

1. Purchase$S&P 500ETF (SPY) $Or$NASDAQ 100ETF (QQQ) $Protective Puts

STRATEGY: When investors hold long positions in U.S. stocks, in order to prevent the risk of a sharp drop, they can buy put options on SPY (S&P 500 ETF) or QQQ (Nasdaq ETF). This strategy can provide insurance-quality protection when the market falls.

• Advantages: Lock the maximum loss, suitable for those who hate risks;

• Shortcomings: You need to pay a royalty. If the market does not fall, the cost will be in vain.

Case: You can consider buying a put option with an expiration in September and an exercise price of 590 or 600 for protection. The current royalty is about 15-20 USD, and the cost is about 2-3%.

2. Buy$S&P 500 Volatility Index (VIX) $Bearish futures VIX Calls

STRATEGY: The VIX index is called the "panic index". When the market volatility increases sharply, the VIX tends to soar. Buying VIX Calls can make a profit when the market falls, thus impacting the main position at a loss.

• Advantages: Particularly sensitive to sharp market declines;

• Shortcomings: VIX usually experiences drastic fluctuations in a short period of time, and the timing requirements are high.

Case: Consider buying a Call with an exercise price of 20 or 25, with the goal of obtaining profits during the waves caused by the Black Swan event.

3. 0DTE Index Option Short-term Offset

STRATEGY: 0DTE (0-day expiration) SPX options provide high flexibility and are suitable for ultra-short-term defense before and after major events.

• Mode of operation: Put was purchased before the incident, and the position was closed after the incident;

• Risk warning: Severe slippage may occur when losses are extremely rapid and liquidity is poor.

Use Recommendations: Suitable for professional investors who have strong prediction of specific risk time points.

2. Commodity-related option strategies

1. Crude oil ETF options ($US Crude Oil ETF (USO) $)-directly to the risk of conflict

Logic: Turbulence in the Middle East will directly push up crude oil prices, and surges in crude oil prices are usually accompanied by declines in US stocks.

strategy：

• Buy the bullish option (Call) of USO to bet on the rise of oil prices;

• Or sell Put options (Put) to participate in the rise in a more conservative way.

Case: Call with an exercise price of 80 or 85 can be bought, or Put with an exercise price of 75 can be sold; If the situation in the Middle East improves and oil prices soar, USO Call is expected to benefit significantly.

2. Gold ETF Options (GLD)-Hedging First Choice Assets

Logic: During wars and financial crises, the demand for gold has increased significantly and prices have risen.

strategy：

• Buy GLD's Call bullish option;

• Or implementBull market looks at spreadsBull Call Spread To control costs.

Case: Make a bull market spread, buy a Call with an exercise price of 310 and sell a Call with an exercise price of 320; The net equity premium is low, and it is suitable for limited cost participation in gold hedging.

3. Agricultural product options (e.g. CORN CORN, wheat WEAT)

Logic: The war may lead to the disruption of agricultural product supply chains, push up grain prices, and indirectly form a negative correlation with U.S. stocks.

Strategy Recommendations: The current corn price is about 4.32 USD. It is recommended to buy Call or sell Put to deal with the supply risks of agricultural products caused by the conflict in the Middle East.