S&P 500 Volatility Risk Rises as Iran 'TACO' Trade Wavers
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The S&P 500's resilience during geopolitical flare-ups has relied on a predictable pattern: sell-offs on Iran tensions get bought back quickly. That pattern broke down in September, injecting fresh uncertainty into index positioning.
If the so-called TACO trade continues to fail, S&P 500 futures could see sharper intraday swings as traders reassess how much geopolitical risk is priced into current valuations.
This breakdown in a reliable dip-buying signal is forcing portfolio managers to rethink hedging strategies around the index, particularly heading into any further escalation headlines.