Geopolitical situations are historically badly priced by options markets; it has paid to be underpricing them. Conflict could spike correlation, impacting the dispersion trade.

Correlation already spiking because event risks infecting multiple countries. Notes wide gap between single-stock and index vol pre-weekend, which geopolitical events can close quickly.

Even if fighting ceases, unresolved regime questions create a bid to underlying volatility, keeping it high.

Energy vol already expanded, now seeing extremes. Call skew massively inverted. Recommends call spreads to take advantage of extreme call skew for high payouts, as a hedge/upside trade.