What happened: U.S. stocks rallied and the VIX fell on Monday, October 26, 2026 after President Trump said there would be no immediate U.S. strike on Iran. Asked over the weekend whether the U.S. would strike Iran that day, Trump told reporters, "The answer is no," adding, "There will not be a strike today," as quoted by MarketDash. He also told Fox News, "I have a decision to make: Do I finish it off, which would be very easy to do, or do I make a deal?" according to TipRanks.

Market moves by early afternoon Eastern time, as reported by Benzinga:

  • Stocks: the S&P 500 rose 0.8% to 7,681, the Nasdaq 100 climbed 1.2% to 29,306, the Dow added 0.3% and the Russell 2000 rose 0.7%. Nvidia gained 2.2% and Tesla 6%.
  • Volatility: the VIX fell 5.9% to 18.31. Last week Cboe said the VIX had climbed to about 20 on demand for downside protection.
  • Oil: WTI crude slipped 0.5% to $102.72 a barrel and Brent's January contract was little changed at $111.84, as Benzinga reported that security officials from Saudi Arabia, Pakistan and Turkey prepared to meet Iranian leaders and Hormuz tanker traffic recovered toward prewar levels.
  • Rates: the 10-year Treasury yield fell 2 basis points to 4.98%, ahead of the Federal Reserve's decision on Wednesday.

    • The pause is not a resolution. MarketDash reported that U.S. Central Command prepared options for follow-up strikes, and Trump's own comments left military action on the table. AP described trading worldwide as shaky, with AI stocks swinging and Brazilian stocks tumbling.

    Educational content only, not financial advice. Options involve significant risk and are not suitable for every investor.

    Why This Matters for Options Traders

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    1. A falling VIX after a headline is relief, not removal of risk. The VIX measures the implied volatility priced into 30-day S&P 500 options. When a feared event is postponed, demand for protection eases and the VIX drops. But the underlying question, strike or deal, is still open, so the market can reprice quickly if the news changes. Our guide on how to read the VIX explains what the level means in terms of expected daily moves.

    2. Weekend gap risk. TipRanks noted that since the war began in late February, Trump has shown a preference for striking Iran when the stock market is closed, such as on weekends. For options traders, that means headline risk can show up as an overnight or Monday-open gap, when positions cannot be adjusted. Short options held over a weekend carry that gap, which is the same issue we covered in today's Brazil election EWZ gap-risk explainer.

    3. Geopolitics is layered on a dense event week. The Fed announces its decision on Wednesday, October 28, and Big Tech earnings and GDP plus core PCE data follow. MarketDash cited CME FedWatch pricing a 90.6% chance the Fed holds rates steady. Short-dated index options this week cover all of these at once, so a calmer VIX on Monday does not mean the week's event premium is gone.

    4. Oil options react directly. With Brent above $110, energy-sector and crude-linked options (for example on oil ETFs or energy stocks) can carry high implied volatility, and headlines about strikes or talks can move crude several percent in a session. Puts and calls on these names often price that two-way risk.

    5. Selling volatility after a drop is a different trade than selling it at a peak. Some traders sell premium when the VIX is elevated, expecting it to fall back. After a drop to the high teens, there is less premium to collect while the event risk remains. Our guides to strategies when the VIX is high and when it is low cover how the trade-off shifts.

    Common Ways Traders Think About This Setup (Educational)

  • Hedge the tail, not the noise. Some investors keep a small amount of downside protection, such as put spreads, through periods of open-ended geopolitical risk instead of reacting to each headline.
  • Use defined-risk structures around weekends. Vertical spreads and iron condors cap losses if the market gaps on news while it is closed.
  • Match expiration to the catalyst. Options expiring Friday, October 30, cover the Fed decision, macro data and many earnings reports together.
  • Watch VIX term structure. Comparing short-dated VIX measures with 30-day VIX shows whether the market expects risk to be near-term or longer-lasting.
  • Keep position size modest. Headline-driven markets can reverse quickly in both directions.

    • Key Takeaways

  • Trump said there would be no immediate U.S. strike on Iran, and on October 26, 2026 the S&P 500 rose 0.8%, the Nasdaq 100 1.2%, and the VIX fell 5.9% to 18.31 (Benzinga).
  • Oil eased, with WTI near $102.72 and Brent near $111.84, as regional officials prepared to meet Iranian leaders.
  • Further strikes remain possible, and reported strike timing has favored weekends, so gap risk for short options is still real.
  • The Fed decision (Oct. 28), Big Tech earnings and GDP and PCE data land this same week, keeping event premium in short-dated index options.

    • Sources

  • Benzinga: Nasdaq 100 Rallies on Chip Rebound; Brazil ETF Sinks 21%: Stock Market Today (Oct. 26, 2026)
  • TipRanks: Dow Jones Advances After Trump Holds Off on Striking Iran (Oct. 26, 2026)
  • MarketDash: Futures Climb After Trump Says No Iran Strike Today (Oct. 26, 2026)
  • MarketDash: Trump Says No Iran Strike Today, Oil Retreats While Dow Futures Edge Higher (Oct. 26, 2026)
  • AP: US stocks climb amid shaky trading in markets worldwide (Oct. 26, 2026)
  • Cboe: Week of 10/19/2026, scramble for downside hedges fuels VIX surge ahead of mega-cap earnings
  • Federal Reserve: FOMC meeting calendar
  • OCC: Characteristics and Risks of Standardized Options

    • By the OptionsPilot Editorial Team. Published October 26, 2026, 11:40 AM PT. This article is for education only and is not investment advice. Options involve risk and are not suitable for all investors.