Lock, Stock and Two Smoking Barrells
Dick Lo4 min read·Just now--
17-April-2026
- Markets experienced a brief retracement following the gangsta-esque rhetoric of U.S. Defense Secretary Pete Hegseth, who declared the military is “locked and loaded” and prepared to recommence combat operations immediately should Tehran fail to commit to a peace deal. Iran further dampened mounting market expectations, with officials reportedly suggesting that further negotiations are “of no benefit” in the absence of a defined framework, while demanding the U.S. abandon its “excessive demands”. Meanwhile, Pakistani officials expressed a higher degree of optimism, reportedly anticipating a “major breakthrough” regarding Tehran’s nuclear programme
- Markets swiftly recovered on subsequent signals of definitive diplomatic momentum, as President Trump announced that a 10-day ceasefire has been formally agreed between Israel and Lebanon, a crucial prerequisite for broader negotiations with Tehran. The President further energised market expectations by asserting that the U.S. is “very close to making a deal with Iran”, suggesting that the regional dominoes are finally beginning to align in favour of a comprehensive peace accord
- The Federal Reserve’s most prominent dove, Governor Stephen Miran, affirmed his support for a rate cut at the upcoming April 28–29 meeting, albeit he appears increasingly isolated in his stance, with the market pricing in a near-certain 99% probability that the Committee will hold rates steady. However, he qualified his stance by suggesting a more measured easing cycle, noting that the “persistently high inflation environment”, exacerbated by the Iran conflict, may necessitate a slower pace of cuts. In a separate speech, New York Fed President John Williams declined to commit to a specific policy path, citing that the conflict has “intensified the uncertainty” and expressing mounting concern over the dual threats of elevated prices and stagnant growth
- JPMorgan noted that ongoing discussions between lawmakers and regulators indicate the CLARITY Act is nearing a final resolution. The bank’s analysts assert that the list of contentious issues has narrowed to just “two or three sticking points”, while the debate surrounding stablecoin rewards is now characterised as being “in a good place”. Notably, that this progress is being reported by a dominant bulge-bracket investment bank, one with a historically vocal stance on digital assets, lends significant weight to the probability of the Act’s passage
- Shares of social media platform Myseum more than doubled after rebranding as “Myseum.AI” in yet another irrational market reaction following Allbirds’ pivot to AI just a day prior. As highlighted in yesterday’s “Historical Rhymes”, such speculative excesses are characteristic of late-cycle froth, and serve as a stark warning that the market may be nearing a point of thematic exhaustion
Trading Roadmap
- With equity markets trading at record highs, investor expectations for a definitive peace accord remain elevated. While signs of progress persist, the probability of a diplomatic hiccup remains non-negligible
- Following a brief $1,000 dip triggered by Secretary Hegseth’s hardline rhetoric, Bitcoin has reclaimed the pivotal $74.5k level. This price action is highly encouraging, considering the likely absence of MSTR treasury bids while STRC recovers par value, with BTC looking to establish a structural floor at this level ahead of a potential upside breakout. However, in the absence of a confirmed date for the second round of negotiations, markets remain vulnerable to weekend low-liquidity volatility, particularly if positive news flow stalls
- We continue to favour adding to positions on pullbacks. We have structured a range of May and June expiries for clients seeking to capitalise on potential dual-catalysts of a Middle East conflict resolution and concrete progress on the CLARITY Act. Notably, we are seeing idiosyncratic outperformance across the altcoin complex, where we remain well-positioned via our May-expiry OTM gamma exposures
- Reflecting reignited client interest in ETH, we structured the following compelling payoff for long ETH holders:
29-May-2026 $2,600 / $3,000 / $3,400 Call Ladder (partially funded by Short $1,700 Puts)
- The structure offers a potential 10x payout on initial premium if ETH settles between $3,000 and $3,400 at expiry
- Should ETH settle above $3,400, the client effectively exits at $3,800, a 63% premium to current spot
Contact the desk for tailored structures on ETH and other altcoins
Disclaimer
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