US stock index futures rose after President Donald Trump paused planned strikes on Iran for two weeks, linked to a conditional reopening of the Strait of Hormuz. DJIA futures added about 1,200 points (near 2.6%), with S&P 500 up about 2.4% and Nasdaq up about 2.8%.
Pakistan brokered the pause after Prime Minister Shehbaz Sharif urged a delay and asked Iran to reopen the strait. Iran said safe passage would be possible for two weeks with coordination, and talks are due in Islamabad on Friday.
Market Response And Volatility
Oil prices fell as blockade fears eased. WTI dropped over 17% to about $93, the steepest one-day fall since 2020, after trading above $115 earlier in the week; Brent fell over 16% to around $92.
Around a fifth of global oil supply passes through Hormuz in peacetime, and MarineTraffic said the first vessels passed on Wednesday. Maersk said it was making no changes, and overall traffic was still limited.
Market volatility eased, with the VIX down about 15% to near 22 from above 25. Semiconductor shares led, with SMH up close to 5%, Broadcom up about 4% and Micron up 7%.
Energy shares fell, with Exxon and Chevron each down over 5%, after the sector rose about 34% in 2026. South Korean equities rose 8%, and the iShares MSCI Emerging Markets ETF gained about 5%.
Risk Signals And Hedging Ideas
The truce faced early strain as Israel carried out more than 100 strikes in 10 minutes across Beirut, southern Lebanon and the Bekaa Valley. Lebanon reported dozens killed and hundreds wounded, while Saudi Arabia said it intercepted nine drones.
Gold rose about 2% to near $4,820 per ounce, and the US Dollar Index fell over 1% to around 98.50. Russell 2000 was up over 5% for the year, while the Dow, Nasdaq and S&P 500 remained down year to date.
The Cboe Volatility Index (VIX) has collapsed to 22, but we should not mistake this for calm. Historically, the VIX average is closer to 19, meaning the market is still on edge and pricing in significant risk over the next 30 days. This drop makes buying protection cheaper, so we should consider purchasing put options on broad indices or call options on the VIX itself to guard against the truce failing.
We are seeing a massive 17% drop in WTI crude oil, which is a reminder of the volatility seen during the 2022 Ukraine invasion and the 2020 pandemic lockdowns. Given that about 21% of the world’s oil supply normally passes through the Strait of Hormuz, this temporary reopening creates a clear opportunity. We should look at buying call options on oil futures or energy ETFs, as they have become significantly cheaper and would profit immensely if the waterway closes again.
The sharp rally in stock futures is based entirely on a temporary, two-week deal that is already showing signs of stress. This provides us an ideal moment to structure defensive trades at a lower cost than was possible last week. We should use this market strength to buy put options on the S&P 500 or Nasdaq 100 as a direct hedge against a rapid reversal if talks in Islamabad break down.
The market has clearly defined the winners and losers, with semiconductor stocks surging while energy stocks have been hammered. This divergence allows us to place targeted bets on the outcome of the ceasefire. We can sell bullish put spreads on the VanEck Semiconductor ETF to collect premium if the truce holds, or buy cheap call options on beaten-down stocks like Exxon Mobil as a leveraged play on the conflict resuming.
We must pay close attention to the fact that gold is rallying while the U.S. dollar is falling. This is a contradictory signal, as a falling dollar typically reflects a risk-on mood, while rising gold indicates persistent safe-haven demand. This divergence tells us the market is not fully buying into the peace narrative, making strategies that bet on a return to chaos a prudent move.
