Trade Alert: Fading Oil
A bearish bet on oil, as we anticipate the Iran war coming to an end soon. Plus, three bullish biotech and space setups.
War-Resolution, Biotech, And Space Setups
In yesterday’s trade alert, we argued that this war is still more likely to end in weeks than months.
What happened after that alert only reinforced the point. President Trump appeared Monday with Defense Secretary Pete Hegseth, CIA Director John Ratcliffe, and Gen. Dan Caine, chairman of the Joint Chiefs of Staff, and later showed up at the White House Easter Egg Roll.
Neither Trump nor his team seemed nervous about Trump’s Tuesday 8:00 p.m. Eastern deadline for Iran to reopen the Strait of Hormuz or face major U.S. strikes.
One reason may be that they still expect a deal. Another may be that they expect another deadline extension. But if you listened to how they described the rescue of the downed F-15 Weapons Systems Officer in Iran, a third possibility is they expect to decisively defeat Iran.
Trump’s Truth Social post from this morning suggests that as well.
The market may not have priced in that scenario yet.
Today’s Macro Trade
In light of that, we are adding a trade today predicated on a relatively fast end to the war: a bearish options trade on the United States Oil Fund (USO 0.00%↑). If the war ends soon, the Strait reopens, and the current oil shock begins to normalize, crude could give back a meaningful chunk of its war premium by summer.
The Other Trades
Beyond that macro trade, today’s alert also includes two biotech names from our Top Names list and one space name from our Market Watchers X list.
The biotech trades reflect our usual interest in names with strong upside potential over the next several months, when we can structure the options intelligently and define the risk. The space trade gives us exposure to a group that could get an additional tailwind from the upcoming SpaceX IPO and the renewed market enthusiasm that could come with it.
Price Discipline Still Applies
The tape is still messy, and volatility is still elevated. So the same rule still applies: we do not get rewarded for chasing. We either get filled at prices that make sense, or we move on.
Today’s Macro Trade
Oil normalization / postwar de-escalation theme
The instrument is the United States Oil Fund (USO 0.00%↑), and our trade is a combo consisting of these four legs:
