Positioning Ahead Of Israel’s Strike On Iran
Ahead of Israel’s strike on Iran yesterday, we opened a hedge: a call spread on the CBOE Volatility Index (VIX). As we noted in yesterday’s trade alert:
In addition, we have a bonus volatility trade today, in things pop off with Iran in the near future.
Iran Gets Hammered
Well, things popped off last night, as you know. Israel launched massive strikes on Iran. But by today’s market open, volatility started to slide, for good reason: the real risk wasn’t Israel striking Iran, but Iran retaliating in ways that could lead to wider disruptions: a massive strike on Israel, blocking the Straits of Hormuz, that sort of thing. And by this morning, it looked like Iran wasn’t capable of doing much in response.
None of its drones made it to Israel.
Maybe Iran’s new drone commander didn’t have his heart in it after his predecessor had just gotten blown up by Israel.
And Iran’s (former?) proxies in Lebanon, Hezbollah, didn’t want any smoke with Israel–understandable after the hammering they took last year, between exploding beepers and walkie-talkies and Israeli bunker-buster bombs.
Iran raising its “red flag of revenge” wasn’t enough to keep the VIX climbing (though it ticked back up a bit as Iran’s ballistic missiles hit Israel later in the day.
So we closed out our VIX hedge today in two tranches, one for a gain of 159%, and the other for a gain of 53%.
Maybe Iran Was Never A Major Geopolitical Force
Russian’s With Attitude suggested as much on X today:
The only power centers in the world that have balls are US/Israel and Russia.
The entirety of the Dar al-Islam is geopolitically impotent and incapable of anything but whining and theatrics. They take humiliation after humiliation and will sell out or slaughter their own brothers before they actually start resisting effectively (Houthi-Fremen are the honorable exception here, but they just make all others look even worse in comparison).
China is incredibly passive and just goes with the flow of everything, never pushes back anywhere, never projects power anywhere (which may very well be part of the ‘do nothing, win’ strategy, but still).
The EU is a collection of sclerotic mini-Bidens, delusional junkies and shrill HR hags. They are incapable of doing anything but blowing up their own economies and oppressing their own populations to own le Putler. Zero drive.
US/Israel is psychotic and hyperactive. They do whatever they want, wherever they want. You almost have to admire the sheer audacity of its never-ending aggression. With their Ukrainian lapdog, they have a fancy new toy, too. Though it’s gonna bite them in the ass someday soon. But they don’t know that yet.
Russia was in the Meek Moderate Boomer ‘Let’s be adults about this’ Zone that I often speak about but has started evolving. It is the ONLY significant force in the world that had enough of the vampire of the world and just went ‘fuck it we ball’.
You can be as critical of some of the Kremlin’s actions as you want but no one else is willing or capable of defeating NATO in the largest land war since WW2.
What Looks Good Now
Here are two names that look good now, in the wake of Israel’s thumping of Iran:
Palantir (PLTR 2.51%↑). This was a Portfolio Armor top ten name recently, and PA Substack subscribers went long via options last month. It’s an AI company with contracts with the U.S. military and seemingly every big company in America… As one account quipped on X last night,
ZIM Integrated Shipping Services (ZIM 5.15%↑). This is an Israeli-headquartered shipping company that PA Substack subscribers went long via options on May 16th. “Zee Contrarian” made a new bullish case for it on X today:
Iran Strikes Back
Iran launched ballistic missiles at Israel later Friday, and those have already proven more successful than its earlier drone strikes.
If you’re worried that the war will expand, consider hedging. You use our website or our iPhone app to scan for the optimal hedge given your risk tolerance and time frame.
And if you want a heads up when we place our next trade, feel free to subscribe to the Portfolio Armor Substack below.
