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The Portfolio Armor Substack
Trade Alert: Hedging

Trade Alert: Hedging

Taking advantage of today's risk-off market action to add some downside protection.

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Portfolio Armor
Jun 16, 2025
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The Portfolio Armor Substack
The Portfolio Armor Substack
Trade Alert: Hedging
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An Iranian anchorwoman leaving her seat as an Israeli air strike hits the state broadcasting headquarters.

Risk-Off Rally On Iran Report

After a weekend of Iran and Israel pounding the hell out of each other, today stocks are up and oil and volatility are down—why? Presumably, it’s due to a WSJ report that Iran is eager to negotiate (even though a CNN report says the opposite). Given the uncertainty and remaining risks if the war expands to impede oil tanker traffic through the Strait of Hormuz, I think it makes sense to hedge here.

With that in mind, I’m adding three specific hedges:

An Oil Spike Hedge

In the event the war threatens to close the Strait of Hormuz, oil prices will spike, as should shares of oil producers who get their oil from elsewhere. For our oil hedge, we’re going to buy call options on an oil E&P with solid fundamentals that gets all of its oil from the U.S. and the Caribbean.

A Volatility Hedge

For this one, we’re going to open another call spread on the CBOE Volatility Index.

A Nasdaq Hedge

For this one, we’re going to use the Portfolio Armor iPhone app to find the optimal put hedge to protect against a >10% drop in the NASDAQ-100 Index over the next month.

Details below.

Today’s Oil Spike Hedge

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