Markets are still weeks away from 'peak panic,' research firm says. Here are 3 tips for navigating war-fueled volatility.

Alpine Macro's Dan Alamariu warns peak market panic from the Iran war is likely still ahead, roughly within the next ~2 weeks, and expects escalation before de‑escalation. He recommends holding energy longs through the peak (oil likely to rise as the Strait of Hormuz remains largely closed), buying beaten-down Asian, GCC and European equities on the dip, and adding longer-duration US Treasurys if the 10-year yield tops 4.5% to hedge recession risk.

Analysis

Elevated geopolitically-driven risk premia tend to manifest first in freight and insurance markets, then transmit into refined-product and regional supply dislocations; expect tanker timecharter rates and marine insurance spreads to lead spot crude moves by 1–3 weeks, amplifying fuel cost pass-through for airlines and shipping-heavy manufacturers. A short-lived spike in spot crude typically pushes refining runs into idiosyncratic stress (hence swings in gasoline/diesel crack spreads), so energy equity upside will be concentrated in upstream producers with unhedged exposure and in tanker owners who capture higher freight rates.

Liquidity-driven de-risking favors USD and US duration in the near term, but the macro channel works the other way: sustained energy shocks reduce discretionary demand and corporate earnings power, creating a multi-month tailwind for nominal bond returns once the shock peaks. The most actionable mean-reversion is likely to show up in non-US cyclicals — Asian exporters and GCC/Europe cyclicals trade on lower absolute valuation multiples and are more levered to a short-term growth snapback when shipping normalizes and risk premia compress.

Volatility creates asymmetric option payoffs: implied vol tends to overshoot realized on the back end of a crisis, making defined-risk long-dated call spreads on energy and put spreads on travel/transport an efficient way to harvest the re-pricing. Key risks that would invalidate mean-reversion are a wider regional conflagration, targeted energy infrastructure strikes, or a durable shift in Western sanction policy that removes a portion of seaborne supply — any of which would extend the pain beyond a quarter and compress realized upside for beaten-down equities.

Timing matters: front-run freight and short-term oil dislocations with 2–6 week vehicles, while funding longer-duration directional rate/bond exposure for a 3–9 month horizon to capture the post-shock yield compression. Size positions to account for fat-tail outcomes (single-digit notional per trade vs portfolio) and use pairs/options to keep gamma/beta central to portfolio volatility management.

Key Decisions for Investors

• Energy long via defined-risk options: Buy XLE 3-month call spreads sized to 1–2% portfolio risk (target 20–40% return if XLE rallies 15–25% in 6–8 weeks). Use a roll-down plan to take 30–50% profits on first pop and trim into elevated vol.
• Regional equity pair: Long EEM or VGK (4–8 week horizon) vs short QQQ (same notional) to isolate geopolitical beta; expect 10–25% relative catch-up if non-US risk premia compress. Stop-loss at a 6–8% absolute move against the pair.
• Rates hedge / pullback trade: If 10Y breaches 4.5%, initiate long-duration exposure via TLT or 10Y futures (3–9 month horizon) with tight duration sizing (target 200–300bps of duration exposure notional) — asymmetric payoff if yields mean-revert 50–150bps; cut if core inflation breakevens rise >25bps.
• Transport differential pair: Long VLCC/tanker owners (example: FRO or EURN-sized position) vs short airline/travel ETF (JETS) for 1–3 months — captures freight-insurance spike vs durable demand hit for carriers. Size as a volatility pair and use options to cap downside on both legs.