US President Donald Trump posted on Truth Social that Iran must reopen the Strait of Hormuz by a deadline or he will destroy Iran. He wrote that Tuesday would be “Power Plant Day and Bridge Day” in Iran, and warned of severe consequences if the strait is not opened.
In a second post, Trump said the deadline is Tuesday, 7 April, at 9:00 PM Eastern time. He also included the phrase “Praise be to Allah” in the first post.
Immediate Iranian Response
After the posts, an Iranian foreign ministry spokesperson said Iran would retaliate against attacks on its infrastructure. The spokesperson said Iran would also target similar infrastructure owned by the US or linked to it.
With a hard deadline of Tuesday evening, we need to act Monday morning. Given that the U.S. Energy Information Administration has consistently noted that about a fifth of the world’s daily oil supply passes through the Strait of Hormuz, any closure represents a massive supply shock. The clearest trade is to buy call options on crude oil futures or related ETFs to profit from a potential price spike.
This level of direct geopolitical threat will almost certainly trigger a flight from risk in the broader market. The CBOE Volatility Index, or VIX, is currently sitting near 15, but we expect it could easily double. Hedging portfolios with put options on the S&P 500 or buying call options on the VIX itself is a prudent move before Tuesday.
We’ve seen this script before, though the stakes feel higher now. Back in September 2019, after drone attacks on Saudi oil facilities, Brent crude futures surged nearly 15% in a single session. That historical precedent suggests a sharp, violent move in energy prices is not just possible but likely if threats are acted upon.
Sector Reactions And Position Management
Beyond the macro plays, we should anticipate sector-specific reactions. Defense contractor stocks, particularly those involved in missile systems and naval hardware, will likely rally on the prospect of military action. Conversely, we should anticipate weakness in airlines and transportation sectors, which are highly sensitive to sudden increases in fuel costs.
This is a short-term volatility play centered on the April 7th deadline. If the deadline passes and the situation de-escalates, the premiums on these options will decay rapidly. We must be ready to unwind these positions quickly to either lock in profits from a spike or cut losses if the threat subsides.
The market’s sharp reaction to supply chain fears in the Red Sea throughout 2025 has shown us how sensitive logistics and energy prices currently are. Those were proxy conflicts and disruptions by non-state actors. This is a direct confrontation, meaning the market’s reaction could be significantly more pronounced than anything we saw last year.
