Iran war ceasefire debrief 🇺🇸🇮🇷

Quite the ride eh? Barely got to enjoy Bayern winning at the Bernabeu yesterday...

TLDR: unwound the wrong positioning rather well. Executed on the correct hedges poorly. Outcome did not align with my read of the fundamentals, why is TBD.

Why did the ceasefire happen now?

Good question, I'd also like to know.

Besides shooting my deep dive to pieces (written 70% of it, but I need to update and reposition now so delayed to next week), it was not the read I had on either.

The US was not at max pain yet. Equities/bonds were actually bouncing, not stressed. Oil pushing, approval falling, but not to the degree where you could not run another 1-2 weeks. Messaging was consistently 'largely achieved', implying they're not done yet. More assets coming to the region.

Same for Iran. Getting your infra leveled would have been a painful blow, but I felt they can hold out for one more escalation round. Trump was evidently loathe to deploy troops. We don't know to what degree the successful but costly (in materiel) SAR mission influenced him. Did he take this success as off-ramp? Possible. Iran could have kept SoH closed and sent oil to $125. Taking the W was the rational and correct play for Iran, but my read was they would overplay their hand as they have in the past. Tbd why they did not.

Imo both folded. US possibly on uranium custody (tbd). Iran on full SoH closure (also tbd). That's why I expected a halfway truce first — energy infra moratorium in return for another 'gift'. Quite possible China's involvement behind the scenes made the difference (also tbd).

Overall my positioning 3 days ago was imo fine: Yes on May/June strikes, No on short ones. Fading No yesterday morning after Iran's ambassador to Pakistan hinted at something was the wrong play. Best spot for No was fading into max volatility before the deadline (tried that too and lost).

Trading play-by-play

I unwound a lot of April 7/15 No yesterday morning. Then the US bombing made me enter again, thinking Iran will shut down the negotiation channel. My read was Iran does not bend if they're not under an existential threat and I did not interpret Trump's posturing as such.

Very late into the game, I got a tip from our Discord channel (opening for a few new people again soon) that Yes looks very likely. Unwound all No at a loss, kept the bit of long Yes I had (dumped 50k shares on the way up before Tuesday...). Tried one last hail mary No at 60c minutes before Trump's tweet but wasn't to be. I unwound it entirely at a small loss after his tweet and swung to Yes, which at that point was a great price (<70c for minutes). Overall 5/10 positioning beforehand, 6/10 execution throughout. Pivoted just in time, took a manageable L and that's ok.

My hedges were great. I had Hormuz opening Yes, the $120 oil strike No (at 25c too!), meeting Yes, Kharg No, invasion No (don't care what 'smart money' thinks, the middle between boots and invasion was a great play). Plus shorted oil at the pico top in the afternoon. All of those with the idea of a delay/partial deal in mind, which would make short ceasefire No hit and crush oil vol.

Every single one printed, but unfortunately, I TP'd on oil literally 5mins before the announcement. Painful, but it is what it is. Don't be greedy. Ended up the night 25k up or so, that's a great outcome considered I had the wrong read! Also the first time I did not get rekt on ME bets. Another improvement, we get better every time 🤝

What's next?

My initial hunch is Trump wants out and won't restart. Some slop deal to be negotiated by Vance (still good price for GOP nominee). Israel sidelined, GCC seething but powerless. Main proxies for now are deal (unwound No, looks fair-ish now) and operations end. I have no position for now, I'll let things settle for a day or two and assess. Deep dive as I said is coming, but I have to reframe it now.

Hungary election on Sunday, working on getting something out on that by the weekend. Good luck everyone 👋