microslop1010
2.7K posts


Israel has pivoted to striking Iranian economic targets as it aims to "create the conditions" for the Iranian regime to fall -Times of Israel Israel aims to cause massive economic damage to the Iranian regime.





Traders are currently shorting $USOIL volatility as if there is no tomorrow (many shorting call options bagging chunky premiums), it’s a “no brainer” trade when the government control on the oil price is still perceived to be tight. So, why not? Sound like free money right? 👇🏻 ⚠️ Here is the problem: the Black Swan risk no risk model or algorithm is wired to take into account by definition exposing traders, whose positions can create infinite losses, to the risk of being wiped out. Oil volatility spiked reaching the stratosphere in 2020 when the oil price crashed through the floor and closed negative due to traders panicking for lockdowns bringing demand for oil near zero. However, the same can happen, theoretically, in the opposite direction with the price of oil skyrocketing to the stratosphere along with volatility. “it never happened, hence cannot happen” is the reason why traders do constantly get wiped out by Black Swan type of events. Paradoxically, the set up to trigger this event is already in place. Oil shortages haven’t simply materialised yet globally due to the lag effect created by SPR and pre-war inventories. The longer the Strait of Hormuz is closed and the higher the amount of damages to the oil infrastructure in the middle east, the higher the probability that there won’t be enough oil to fulfil all the demand. Sure there will be demand destruction created by higher and higher prices, but there are also operations in the economy that cannot afford to run out of oil at any cost. Furthermore, till prices remain artificially low, it gives the opportunity to those not in critical need of oil to stock additional inventory eventually taking away resources from those who cannot afford to run out of oil (think of US Navy ships as an extreme case). Not only the probability of seeing the oil price spiking vertically isn’t zero, but is also increasing day by day. I know I know, considering I am talking about a “Black Swan” before it happened doesn’t make it a Black Swan. True, for those who will read this post, feel free to call it a Grey Rhino. However, for those who don’t, if this event occurs it will be a Black Swan nevertheless. @nntaleb

























