Insights 
VT 
President Donald Trump mentioned that trade negotiations are progressing, with new deals nearly ready for announcement. He emphasised the potential of trade to facilitate peace and expressed openness to talks with Europe, alongside discussions with the EU about trade agreements.
Trump stated he frequently communicates with Russian President Vladimir Putin, aiming for a resolution in Ukraine. He proposed imposing 100% tariffs on Russia and secondary sanctions on countries buying Russian oil if no peace deal emerges in 50 days.
American Patriots and broader weapons shipments are expected to arrive in Ukraine within days. Trump feels that a peace deal has been close multiple times and sees the current moment as an opportunity for peace.
Trade Tensions And Market Opportunities
Based on the former president’s latest remarks, our view is that the coming weeks present a landscape of diverging opportunities, demanding a two-pronged strategy. The talk of trade deals with Europe and progress with China suggests a potential calming of global trade anxieties. We’ve seen this playbook before; during the 2018-2019 tariff escalations, every hint of a deal would send equities soaring. With the VIX, the market’s primary fear gauge, already hovering near two-year lows around 13, traders should see this as a signal. The market is not priced for good news. We believe selling volatility on broad market indices like the SPX could be advantageous, positioning for a potential grind higher if trade tensions ease as he suggests.
However, the situation with Russia presents a dramatically different and more explosive setup. The 50-day deadline laid out by Trump creates a clear, binary event. This isn’t about a gradual shift; it’s about a switch being flipped. On one hand, a peace deal, however unlikely it may seem with new weapon shipments arriving, would trigger a massive risk-on rally in European assets and could send energy prices tumbling. On the other hand, the imposition of 100% tariffs and, more critically, secondary sanctions, would be a seismic shock to the energy markets.
Preparing For Oil Market Volatility
We see the most asymmetric opportunity in oil. Russia still exports over 7 million barrels of oil and fuel per day. Secondary sanctions would attempt to remove a significant portion of that from the global market, a far more aggressive move than the current price cap. Recall that in the month after the 2022 invasion, Brent crude surged over 30%. This is the kind of volatility we must prepare for. The correct play here is not to bet on peace or war, but to bet on the volatility itself. We are looking at long-dated straddles on oil futures or related ETFs like USO. This allows a trader to profit from a massive price spike caused by sanctions or a significant price collapse following a surprise peace accord. The key is positioning for a violent move, as the current stability is unlikely to hold once that 50-day clock runs out.
