A lot has been written on how the U.S., or perhaps even more likely, Israel, might hit Iran's nuclear facilities in an attempt to delay or destroy Iran's nuclear ambitions.
However, Iran's program is much larger, much more dispersed, farther away, and Iran has a lot more military might, if not to strike back at Israel, at least to try and disrupt oil commerce in the region, namely through attempts to close the Strait of Hormuz.
If strikes on Iran do occur, a large, negative, stock market impact can be expected. Likewise, a large spike on crude prices can also be expected.
The war has started already
While open military strikes cannot be ruled out, their consequences are grave enough that considerable political resistance is to be expected. On the other hand, however, we might also say this war has already started.
Why do I say this? Because in the last few years an epidemic of bomb blasts
has been hitting Iran's key personnel working on its atomic project. Surely, these are not coincidences, and as such we can already speak about the war having started, even if through a low-level engagement.
This has not gone unnoticed in Teheran, and now talk has started about retaliation. Still, market-wise one would expect that only a hot, open, visible war would have impact. Yet, what sometimes starts out as a silent conflict can also escalate into a full-blown war.
The Iran war has already started even if the conflict is not on mainstream news. As long as it remains a silent war, its impact on markets will probably amount to nothing.
However, beware of possible escalation into a hot war, and the spike such could bring to crude USO, as well as the negative impact it would have on the stock market. I would rate the likelihood of such event as still low, but would recommend against writing puts on the market, namely the main ETFs SPY, DIA and QQQ, as well as against writing calls on USO or other crude ETFs.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.