What the Options Market Is Signaling About US-Iran Tensions

• The options market indicates investors are 'very hedged' for a challenging outcome in Iran, with the skew in Triple Qs as wide as during the April tariff tantrum.
• The oil market shows bullishness comparable to when oil was $120/barrel during Russia's invasion of Ukraine.
• The market is 'screaming military intervention, not diplomatic off-ramp', and a further oil price spike would be a 'least desired outcome'.

Julian Emanuel of Evercore ISI identifies US-Iran tensions as the next potential market catalyst, noting that the options market is heavily hedged for a 'challenging outcome' and the oil market is exhibiting bullishness similar to past crises. He suggests the market is 'screaming military intervention' rather than a diplomatic solution, with a further oil price spike being a 'least desired outcome'.