Insights 
VT 
Trump announced that Iran and Israel have agreed to a “Complete and Total CEASEFIRE”. The ceasefire is set to last 12 hours and is expected to come into effect in approximately six hours.
There has not yet been any official confirmation from either Israel or Iran regarding this agreement.
Market Reaction
In response to this development, the price of crude oil has continued to decrease. Meanwhile, US equity index futures are on the rise.
What this means is that Trump has taken to publicly share an announcement of a 12-hour ceasefire between Iran and Israel, which he described as “Complete and Total”. According to his statement, it’s expected to begin about six hours after the time of his disclosure. However, no official communication from Israel or Iran has followed to either confirm or deny the agreement. At the moment, it remains unverified.
Not surprisingly, the market reaction was immediate. Crude oil began falling further, a move likely fuelled by expectations that immediate risks to supply in the region may now be lower. At the same time, US equity index futures began ticking higher, possibly reflecting a broader relief among risk assets or short-term adjustments to positioning. Traders who had previously taken caution may now be backing off slightly, prompted by this pause in regional tensions, even if only temporary.
In similar episodes from earlier this year and late last year, when large geopolitical concerns suddenly relaxed, we saw comparable moves. Commodities linked to conflict, such as oil and natural gas, tend to retrace. On the other hand, equity-linked instruments, particularly index futures, often reclaim lost territory in the short term. We acknowledge that data from previous Middle East ceasefires (assuming uptake) often result in compressed volatility on higher beta assets, but that condition can reverse quickly.
Futures Positioning and Strategy
Tactically, we’re looking at reduced implied volatility in the near end of the oil options curve. That tends to attract the kind of short gamma positioning we’ve seen in quieter geopolitical patches. However, seeking carry this early may be premature. We’ve noticed in three of the last five geopolitical de-escalation attempts involving regional actors, tactical buyers stepped back in within one or two sessions, particularly when clarity was lacking—as it is now. There’s no formal uptake by the involved parties, and timing past announcements shows that unverified declarations frequently lead to mean-reversion-type moves in both crude and indices.
Futures positioning in the S&P complex today also shifted. A sharp rotation into the Nasdaq futures just before the announcement suggests there may have been anticipation or early whispers. If so, short-covering has already done some of the narrow work. We’re paying attention to opening flows in regular session cash markets to confirm whether broader participation follows through, or whether this was hedged speculative repositioning from overnight players.
In these circumstances, marginal changes in term structure for both energy and equity vol products often mislead participants into overconfidence. We’ve seen the front-month OVX, for instance, respond too aggressively to diplomatic headlines that are then walked back within 48 hours. Remember late March? A similar drop in implieds proved short-lived, offering limited advantage to passive sellers.
With that said, it’s not the headline alone that matters, but confirmation—or lack thereof—in the next day or so. Market makers have already begun adjusting bid-offer spreads in options related to Brent and WTI. That’s a clear sign of uncertainty rather than calm. And we note that this week’s large open interest in WTI puts around $81.50 may still cap deeper retracements, especially if confirmation does not arrive.
At this point, acting on uncorroborated reports could lead to ill-timed moves, especially with key macro releases scheduled in two days that might easily overshadow current geopolitical developments. Pay attention to how the curve adjusts in Brent futures contracts around the second and third expiry windows—short sellers there took profit swiftly last time conditions eased without follow-through.
