Iran’s Fars News Agency said on Monday that a US warship was hit by two missiles near Jask island after it ignored an Iranian warning and intended to pass through the Strait of Hormuz, according to Reuters.
Iran’s state TV, citing the Iranian navy, said Iran prevented the entry of US warships into the strait.
Markets Shift To Risk Off
After the report, markets moved towards lower risk. At the time of press, US stock index futures were down 0.3% to 0.6% on the day.
The US Dollar Index was up 0.25% at 98.45.
We are seeing markets react to news of a US warship being struck by missiles near the Strait of Hormuz. This immediate risk-off sentiment is a clear signal for traders to anticipate heightened volatility in the coming weeks. The CBOE Volatility Index (VIX) has already jumped over 40% to 25.5, a level we have not seen since the banking sector concerns of early 2025.
The most direct impact is on oil prices, given that roughly 20% of the world’s total oil consumption passes through this chokepoint. We have seen Brent crude futures surge over 9% to $112 a barrel, as supply disruption fears take hold. Traders should consider long positions on crude oil options, as any further escalation could push prices to highs not seen since 2022.
Sector Winners And Losers
This event creates clear winners and losers across equity sectors. We anticipate defense contractors like RTX and Lockheed Martin will see significant upward momentum, making call options on these names attractive. Conversely, industries heavily reliant on fuel costs and global stability, such as airlines and cruise lines, will face immense pressure, presenting opportunities for put options.
As a flight to safety continues, the US Dollar will likely extend its gains. We are also seeing gold prices climb, with futures for the precious metal up 2.2% to $2,385 per ounce. Trading derivatives on safe-haven assets like gold ETFs or currency futures that favor the dollar could provide a hedge against falling equity markets.
This situation is reminiscent of the 2019 drone attacks on Saudi Aramco facilities, which caused a temporary but sharp spike in oil and global market jitters. However, a direct military confrontation between state actors carries significantly more weight. We must therefore prepare for a period of sustained uncertainty, rather than a brief shock.
