On declines, sell put options and buy call options and stocks.

On rallies, take profits on calls and stocks and buy puts.

Such is the metronomic trading pattern that has emerged as active investors try to navigate an odd moment for markets and international diplomacy.

Though some investors have stepped away from active trading until there is more certainty, or less craziness, around the Iran war, the fervor for stocks remains stunning. This bullish phenomenon is at odds with how investors often respond to uncertainty—and that’s intriguing.

Though we have highlighted the importance of individual investors to the market’s tenor, especially those who became active after the 2008-09 financial crisis, it’s important to note that as much as 90% of stock trading is attributable to computers.

That fact is rarely discussed because computers are thus far unable to talk to strategists and financial media, and quantitative investors never offer insights into what drives their strategies.

For now, analyzing trading flows offers the best insight into quants and other systematic investors, who invest off data analysis and computerized trading rules. Market talk suggests these powerful investors have bought some $135 billion of global equity futures over the past two weeks and plan to buy another $50 billion.

When investors buy S&P 500 index futures, it sparks stock rallies. Traders then buy stocks to get ahead of the buying and hedging waves that flow from derivatives into equities.

Dennis Davitt, managing partner of investment manager Millbank Dartmoor Portsmouth, tells Barron’s he sees strong buying demand for calls and stocks among pensions and insurance companies, which invest huge sums for people like teachers and firefighters. Those staid communities rarely figure into market discussions, though they control extraordinary sums.

Recent troubles in private-equity markets, especially private credit, have fueled an enormous demand from these firms for stocks and upside calls, Davitt says.

“The major institutions—pensions and insurance companies—do not own enough public equity. They have heavily overweighted private equity and private lending, which have struggled this year, so the institutions have a strong appetite for stocks and bullish calls,” he says.

The lockups and liquidity issues that have attracted attention were historically offset by selling stocks. The proceeds from stocks gave pension and insurance managers much-needed cash, but it also lowered institutional equity allocations. Major institutions are thus buying stocks and calls to normalize portfolio allocations.

They are also buying equities to reduce the risk of fixed income, Davitt says. If the Federal Reserve raises interest rates to offset inflationary pressures from the Iran war, stocks tend to outperform bonds. Private equity performs well in inflationary environments, but that money isn’t liquid; equities are.

“Public-equity portfolios have been a checkbook for institutions,” he says.

Strengthening stocks’ bullish case is corporate earnings season, which so far has been robust. Of course, only a small number of technology companies are driving bullish earnings revisions and pushing the stock market higher, but the market mob, and their cheerleading commentariat, don’t seem to care. Meanwhile, strong earnings help pension and insurance investors justify their equity allocations.

Markets appear to be behaving as if they have become so important to the world’s welfare as to be insulated from political and diplomatic consequences. It’s wise to avoid that conclusion.

Trade the metronome as it swings back and forth, but don’t let the hypnotic sound lull you into complacency. Remember, even paranoids have enemies.