Mediators have proposed a 10-day ceasefire—will the U.S. and Iran enter a 'cooling-off period'?

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Options Sir on Macro | U.S.-Iran Tensions Flare Again! Amid Repeated Geopolitical Black Swans, How Can You Hedge Risk Using U.S. Equity Index Derivatives?

On June 11, 2026, market hopes for a U.S.-Iran peace deal were dashed once again. The day before, U.S. forces conducted airstrikes on Iranian territory, prompting Iran to firmly close the Strait of Hormuz—the critical oil chokepoint. The U.S. blamed Iran for dragging out negotiations and shooting down a military aircraft, while Iran accused the U.S. of repeatedly sabotaging ceasefire efforts.

This unexpected event sharply escalated tensions in the Middle East and dropped a 'bomb' on global energy and financial markets.

I. After more than thirty cycles of dashed market expectations, how long will the U.S.-Iran conflict continue?

According to The Guardian, citing CNN data,Trump has claimed at least 38 times that a U.S.-Iran deal was 'imminent,' yet it has never materialized.

The fundamental reason is the irreconcilable core disagreements between the U.S. and Iran:The U.S. demands that Iran significantly curtail uranium enrichment, accept stringent inspections, and reduce its regional proxy activities; Iran insists on full sanctions relief, security guarantees, and the right to maintain a limited enrichment capability.

The lack of mutual trust turned 'negotiations' into a 'tactic to buy time,' ultimately escalating into this week’s military strikes and strait blockades. Renewed hostilities triggered declines across U.S. equities, Bitcoin, gold, and other assets on Wednesday evening.

However, a puzzling phenomenon for many bears has emerged: crude oil prices did rise, but not in an uncontrolled, explosive surge. $Crude Oil Futures (SEP6) (CLmain.US)$ After briefly surging above $93 per barrel, prices pulled back, as if firmly restrained by an invisible hand.

The answer lies in suspicions of 'insider trading in U.S. crude markets' and Trump’s 'tweet-driven market manipulation.'According to data disclosed by National Business Daily, in the periods preceding the last five signals of geopolitical de-escalation, over $3.5 billion in capital precisely shorted crude oil in advance.

These frequent, pinpoint attacks have severely dampened bullish sentiment.Market participants now must not only guess whether Iran will retaliate but also anticipate when Washington might post a tweet claiming 'significant progress in ceasefire talks' to crash the market. This extreme uncertainty around news flow means that even if the strait were truly closed, speculative capital remains reluctant to take aggressive long positions, fearing becoming victims of Trump’s verbal interventions.

So, some investors may naturally ask: when is the U.S.-Iran standoff likely to end?

Trump may have an implicit 'red line' in mind. On June 3, he suggested the U.S. naval blockade of Iran could last until Labor Day (September 7), though he later stated a deal could happen at any moment. On June 9, Vice President Vance indicated an agreement might be reached within a week—or it could take months—but would definitely be finalized before the November midterm elections.

However, Iran may not fully align with America’s timeline, and given the significant difficulty in reaching mutual compromise, the timing of a ceasefire remains highly uncertain. In the near term, the conflict is likely to persist in a state of 'controlled escalation' or intermittent tension, making a swift and definitive resolution unlikely.

II. Multiple Factors in Convergence: Geopolitical Risks Are Not the Only Force Pressuring the Index

Compared to the uncertainty in the crude oil market, the drivers behind stock index volatility are considerably more complex.Current downward pressure on the index stems from a confluence of five factors: renewed expectations of macro monetary tightening, a pullback in AI-related sentiment, liquidity drain from a mega IPO, overbought technical conditions, and escalating geopolitical risks.

The U.S. May nonfarm payrolls data significantly exceeded expectations, completely reversing market expectations for monetary policy: investors had broadly bet on Fed rate cuts within the year, but such expectations have now largely evaporated. Goldman Sachs has pushed back its forecast for the Fed’s final two rate cuts to 2027, while BNP Paribas even anticipates the Fed will begin raising rates three times consecutively starting December 2026.

U.S. Treasury yields have risen in tandem, and given that U.S. tech stocks are highly sensitive to interest rate movements, their valuations have been directly pressured by higher discount rates, making them one of the key drivers of this sell-off.

Moreover, expectations for AI-related stocks have already been pushed to extreme levels—for example, $Broadcom (AVGO.US)$ and $Oracle (ORCL.US)$ earnings reports have all been strong, yet share prices declined post-earnings; when expectations soar, even outstanding results can disappoint.

Compounding this, SpaceX’s mega IPO is currently siphoning market liquidity. Although the long-term thesis for the AI sector remains intact, short-term positioning has shown signs of unwinding after becoming overcrowded.

III. Index ETF Options Strategies

In today’s market—where headlines shift every half hour—constructing asymmetric payoff structures using options has become a core approach. Below are four strategies tailored to investors with different risk appetites:

(The following strategies are explained using $SPDR S&P 500 ETF (SPY.US)$ options and do not constitute any investment advice or guarantee.)

1. Protective Put (for hedging existing spot positions)

Investors holding spot positions in index ETFs such as $SPDR S&P 500 ETF (SPY.US)$ may consider buying Put options as 'insurance.' In the event of a sharp market decline, the Put options gain significant value, offsetting losses in the underlying position, with maximum loss capped at the premium paid plus the strike-price difference;

The risk lies in the premium cost—if the index continues to rise, time decay erodes the option’s value, creating a drag on returns.This strategy suits conservative investors who maintain a medium- to long-term bullish outlook but are highly concerned about near-term geopolitical risks.

(The design images displayed on screen are for illustrative purposes only and do not constitute any investment advice or guarantee; market conditions change frequently, and the prices shown do not reflect actual market values.)

2. Covered Call (for range-bound or mildly bullish expectations)

Investors holding spot positions in index ETFs such as $SPDR S&P 500 ETF (SPY.US)$ may consider simultaneously selling out-of-the-money Call options to collect premiums and enhance overall returns. When the index trades sideways or rises modestly, the premium directly boosts the annualized yield of the position; even if assigned, the underlying asset is sold at a higher price.

Risk: If the index rises sharply, gains will be capped at the upper limit, causing investors to miss out on additional profits. This is suitable for investors who expect no significant directional move in the short term and seek stable cash flow.

3. Bear Put Spread (for moderately bearish outlook with cost control)

Investors may consider buying a put option with a higher strike price while simultaneously selling a put option with a lower strike price. This generates limited but defined profit if the index declines, with maximum gain equal to the difference between the strike prices minus the net premium paid;

The maximum loss of this strategy is limited to the net premium paid; if the index rises instead of falling, the entire premium is lost,This strategy suits investors who anticipate some downside movement but wish to avoid the high cost and significant time decay risk associated with buying puts outright.

4. Bull Call Spread (for expecting a short-term index rebound)

Investors may consider buying a call option with a lower strike price while simultaneously selling a call option with a higher strike price. This allows them to gain leveraged returns at a relatively low cost if the index experiences a sharp short-term rebound, with maximum gain equal to the difference between the strike prices minus the net premium paid;

The risk is that if the index fails to reach the higher strike price or declines, the entire net premium will be lost,This is suitable for investors who expect a short-term rebound in the broader market index but prefer not to take a large directional long position.

IV. Index ETF Futures and Crude Oil Futures Strategies

Investors may also consider trading U.S. equity index futures and crude oil futures to hedge risk: $Crude Oil Futures (SEP6) (CLmain.US)$ 、 $E-mini Dow Futures (SEP6) (YMmain.US)$ 、 $E-mini NASDAQ 100 Futures (SEP6) (NQmain.US)$$Micro E-mini Nasdaq-100 Index Futures (SEP6) (MNQmain.US)$ 、 $E-mini S&P 500 Futures (SEP6) (ESmain.US)$ 。

Given the unpredictability of Trump's impromptu remarks, ceasefire negotiation progress, or sudden military actions, investors should exercise extreme caution with aggressive directional positions in the current environment and are advised to strictly set stop-loss levels.

For index futures, investors may consider intraday hedging strategies.Investors could also consider constructing delta-neutral positions using index futures and spot holdings to capture short-term directional opportunities amid sharp intraday volatility. For example, when geopolitical news negatively impacts equity indices, one could hold spot index exposure while simultaneously shorting index futures intraday.

In the event of a geopolitical black swan event, investors may also consider a bearish calendar spread strategy—selling near-dated contracts and buying longer-dated ones.The specific approach involves selling the near-month contract and buying the far-month contract. When the broader U.S. equity index declines, market sentiment typically follows a pattern: panic is immediate, while rationality is deferred to the future. This means the near-month contract (e.g., June) tends to react more sharply to negative news and falls more steeply, whereas the far-month contract (e.g., December), being further out, allows more time for the market to digest the news and thus experiences a relatively milder decline. Profits can then be realized by closing the position through buying back the near-month and selling the far-month contracts.

For example, $Invesco QQQ Trust (QQQ.US)$ Index futures, near-month contract $E-mini NASDAQ 100 JUN6 (NQ2606.US)$ fell from 29,095 to 28,472 on the previous trading day (a decline of 2.29%), while the far-month contract $E-mini NASDAQ 100 DEC6 (NQ2612.US)$ declined from 29,586 to 29,000 (a drop of 2.28%).

However, calendar spread arbitrage is not risk-free—the greatest risk lies in misjudgment., for example, in the above scenario, investors expect the near-month contract to decline more sharply; however, if the far-month contract falls even more steeply due to intensifying recession expectations, investors could incur losses on both sides.

In addition,Investors may consider cross-commodity hedging. Since rising oil prices are typically accompanied by downside pressure on equities, investors could consider constructing a paired position of "long crude oil futures + short equity index futures": crude oil futures capture geopolitical risk premium upside, while index futures hedge against equity market declines driven by macro-level risk aversion. The risk of this strategy lies in market reversals—for instance, simultaneous declines in oil prices and rallies in equity indices could lead to losses on both legs.

Fellow investors, what do you think about how the U.S.-Iran conflict will evolve?

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