Here's how far a strategist says stocks would have to drop to 'guarantee' a Trump pivot on Iran

• The US-Iran conflict has weighed on stocks and pushed up oil prices.
• For Trump to pivot from the Iran war, the S&P 500 would have to drop at least 10% BCA's Marko Papic says.
• Papic is a geopolitical expert and the chief strategist at BCA Research.

Stocks have been battered by volatility this week after the US and Israel launched attacks on Iran, but how far would the market have to drop before things get too painful for Donald Trump?

According to Marko Papic, a geopolitical expert and the chief strategist at BCA Research, stocks would have to enter a proper correction before Trump starts to back off from his war against Iran.

"We believe that the S&P 500 would have to correct by more than 10% to practically guarantee a put," Papic wrote in a note to clients on Wednesday. "We are open minded that it could occur before; it could also occur later. But a double-digit stock price decline will certainly be a greater motivator."

Investors have been spooked by the conflict due to its impact on oil prices, as Iran controls the Strait of Hormuz, a key waterway that handles 20% of the world's oil flows. Disruptions of shipping through the Strait threaten to send oil prices spiraling higher, which could fuel higher inflation and keep interest rates elevated.

On Tuesday, Trump said that the US would ensure the passage of ships in the Strait, putting investors at ease. Stocks rose and oil dropped for the first time since the war began last Saturday.

But Papic cautioned that even if Trump seeks to de-escalate Iran might not be interested in a truce. With Iran's regime threatened more than before — US strikes have killed Supreme Leader Ayatollah Ali Khamenei and other high-level officials — Papic said it's likely to put up more of a fight than in previous conflicts.

"We are shocked at how shocked our clients and the media are by Iran's retaliation against Gulf monarchies and global energy. It tells us that the median investor does not understand what pressure Tehran is under," Papic wrote.

"This time around, Iran must — in a rational, game-theoretical sense — impose pain on the US and the wider global economy," he continued. "Pain is the only way to ensure that the American utility function is updated for what happens when you risk Iran's regime stability."

This is not Papic's first time predicting that Trump could capitulate due to pressure from markets. Last March, he told Business Insider that Trump would back off his trade war if the S&P 500 fell 15 % to 20%. In April, Trump announced a pause to his tariffs when the index was down 19% from its February highs, and as 10-year Treasury yields spiked.