The Trump factor: traders pay for protection from weekend outbursts
US president Donald Trump loves a weekend social media post, repeatedly divulging market-moving information on these supposed days of rest ever since ordering US forces to start bombing Iran on February 28, the last Saturday of the month.
Traders, who generally prefer to put their feet up once markets close on Fridays, have responded with a new playbook: buying insurance that covers them against any fresh Iran war headlines that land before markets open on Monday.
Euro-dollar FX options have seen their value increase by an average of 20%–25% on Fridays in recent weeks, according to Natixis CIB, flipping traditional market dynamics on their head. Ordinarily, the value of an option declines on a Friday because traders can't lock in prices that move in their favour while markets are closed over the weekend.
The shift in option market norms comes as investors adapt their hedging strategies in the wake of some of the most crucial Iran updates from the US president arriving on Saturdays and Sundays. Now the priority is ensuring they’re shielded against further price swings when markets reopen on Monday morning – and they're having to pay up for that insurance.
“Market uncertainty has to be quite extreme to create this dynamic,” said Chris Turner, global head of markets and regional head of research for the UK and CEE at ING. “Instead of weekends seeing the value of options declining, now people want to own options over the weekend because their value has been increasing amid growing expectations of weekend event risk.”
Samy Bellady, head of FX options trading at Natixis CIB, said the increase in the value of options on Fridays has been similar to what was observed last April following the chaotic rollout of Trump’s sweeping tariff announcements on US trading partners. Back then, traders were also worried about getting wrongfooted by news developments over the weekend.
“Last year, there were a lot of weekend Trump tariff announcements, which created lots of big moves in the FX market which were completely unexpected,” Bellady said. “A lot of clients tried to avoid being caught short come Mondays as even a 0.5% gap between Friday and Monday spot levels isn’t hedgeable, unfortunately. We’ve been observing a similar dynamic since the start of the Iran war.”
Friday feeling
Many of the most critical updates on the Iran war have come at the weekend. For instance, markets nosedived in early trading on Monday March 23 after Trump threatened over the previous weekend to target Iranian energy infrastructure in what would have constituted a serious escalation of the conflict. Asset prices subsequently rebounded dramatically after Trump reversed course before US stock markets opened that day and said the US had started talking to Iran about ending the war.
Such developments have put investors on edge. Some of the biggest stock market drops since the war began have occurred on Fridays as investors have looked to dial down risk heading into the weekend. Friday March 20 saw the largest cash turnover in the Euro Stoxx 50 Index of the past 15 years, according to Societe Generale strategists, who said it suggested “significant squaring of positions” going into the weekend.
That volatility has pushed up the cost of equity options at the end of the week. Cboe’s VIX, which measures the implied volatility of S&P 500 options, jumped 12 points on average on Fridays during March, compared with an average 0.4 point decline in the rest of the trading week. In January and February, the VIX fell 4.5 points on average on Fridays, while registering a small increase on other trading days.
In FX markets, the demand to hedge against geopolitical weekend whiplash has inevitably pushed up the cost of options too – in particular for one-week and one-month timeframes. The implied volatility of one-month euro-dollar options has increased to around 8% in recent weeks, up from 5% at the start of 2026, as their value has risen. Turner noted that is below the 10% level seen last April at the height of the tariff turmoil but said it still represents “a pretty big step-up in pricing for corporates wanting to hedge themselves against market moves”.
Paying up
That steep price tag is ultimately making investors question whether paying up for protection is worth it given the fast-paced nature of Iran war updates, bankers say. On Tuesday, Trump told reporters that US military action in Iran could end in “two or three weeks”, indicating a speedier resolution to the conflict than previously feared.
Markets rallied sharply before giving up some of those gains in Thursday morning trading after Trump gave no indication that the war would soon end in a national address the previous evening.
“A lot of corporates and investors are caught in the headlights at the moment,” Turner said. “They’re worried about being committed to a strategy they can’t easily amend or unwind later down the line. So a lot of people are sitting on the sidelines and continuing to evaluate the situation as it develops.”
Bellady said clients have had to adapt to the changes in options pricing dynamics, and take it into consideration when adjusting their positions. However, he said market liquidity has not been affected by the moves.
“It’s still possible to trade within the FX options market, especially for popular currency pairs. FX options are still liquid, there’s just an extra premium for them now,” he said.
