Peace Broke Out, Then It Didn't

For about three days last week it genuinely looked like the war was ending. On the Sunday the framework landed: a memorandum between the US and Iran, the Strait of Hormuz to reopen, the US naval blockade to come off, and a signing ceremony pencilled in for Switzerland on the Friday. Markets did what they always do with relief, all at once. Asia gapped up hard on the Monday, the Nikkei alone up more than five percent, and crude went the other way, sliding fast as the war premium started bleeding out of the price.

For a book that had spent a month positioned around the oil shock, that was the moment of truth. Some of it I had already taken care of in the previous weeks. The rest of it, the deal cracked wide open.

I closed USO at 113.41, and the runner came off at a small loss. I want to be straight about that, because the Trade Log shows it and so should I. The crude position was always the tactical, short-term leg, a way to get paid if the talks fell apart and the war premium kept climbing. A peace framework is the opposite of that. With oil down about ten percent on the week and price back below where I bought it, holding a long-oil view into a deal made no sense, so I took the loss and moved on. The plan always had two exits, sell into a spike or stop into a deal, and this was the second one.

One piece of it is still alive, on purpose. That small, defined-risk call I bought on the deal event is still on into Thursday's expiry. It points the same way as the old long, but it only ever risks its premium, and it pays if the talks break down and oil gaps higher. A week ago that looked like the long shot. By the Monday open it did not.

Here is what happened after the framework. Israel hit Lebanon, the planned Switzerland signing was cancelled, and the whole thing began to wobble. An Israel and Hezbollah ceasefire was agreed on the Friday, which helped, but over the weekend the talks that did go ahead pointedly left out the nuclear question, Iran demanded an end to the Lebanon fighting as a condition for going further, and Tehran said it had halted traffic through the Strait again. Through it all the President spent the weekend threatening fresh strikes and floating tolls on the waterway.

So the clean peace narrative lasted about a week before it frayed. By the Monday open crude was back up more than a percent and trading above seventy-eight dollars. This is the entire reason I trade the oil story as a range rather than a forecast. Nobody, me included, can tell you which headline lands next, you can only size for the fact that one of them will.

While all of that was going on, the other side of the market threw a party. SpaceX went public on the 12th in the largest IPO ever, priced at 135 dollars, opened around 150, and then went almost vertical, printing an all-time high near 225 inside four sessions. It was a retail stampede, the most-bought name on the tape, the kind of move where the story sets the price and valuation takes the week off.

I am leaning against it, small. Not because I have anything against the company, but because the base rate for fresh listings is genuinely unkind. The long-run academic work, Ritter's data at Florida and the NBER reviews, finds that IPOs underperform the broad market over their first one to three years, and that the deals which roll over early go on to lose to the market about two-thirds of the time over three years. On top of that, the chart ran straight into the round 200 and 225 levels, which is exactly where this kind of momentum tends to stall. It is sized small and tactical at three percent, because shorting a euphoric, retail-driven name can squeeze hard, and the cap on size is the risk control.

There are two new trades on the book as well, both built to get paid for patience rather than to call a direction. I sold the 80-strike put on STRC, one of Strategy's preferred securities that is engineered to sit near its 100 par, for a 4.95 premium on a small notional: if it holds above 80 I keep the credit, and if I am assigned I am long a discounted, income-paying preferred near a 75 basis that I can then wheel back toward par with covered calls. Under silver I rolled a fresh round of cash-secured puts on the same logic, taking in premium while I wait for a better level to add. The safe-haven metals were the most exposed to the peace headlines this week.

I am carrying them anyway. The silver case is structural and far longer-term than one week of peace headlines, the puts I have sold underneath lower the cost of holding, and the weekend re-escalation is a fair reminder that the safe-haven bid is only ever one headline away from coming back.

Elsewhere, McDonald's is still quietly working as a quality mean-reversion long and is being scaled out toward 295. Realised P&L sits at around plus three and a half percent in portfolio terms after taking the oil loss, with the SpaceX short and the two income trades now the live, interesting parts of the book. As always it is percentages only, and the whole thing updates live on the Trade Log.

Everything still keys off the same two questions. Does the framework actually hold, or does the weekend's fraying turn back into escalation, and where does that leave oil. And does the post-listing euphoria in names like SpaceX cool the way the base rate says it should, or does the momentum crowd keep it aloft a while longer.

I am positioned for both to wobble: a defined-risk call that pays if oil snaps higher, a small short that pays if the IPO frenzy fades, and a core of income trades getting paid to wait in between. That is the nice thing about a week like this one. You do not have to know the answer, you just have to be set up so that more than one of them works. Reply any time, I read every single one.