Chapter 2: The Emergence of a Global System of States, 1500-Today

Outcome:

The situation has deteriorated. Iran has mobilized troops and even prepared its nuclear weapons for a strike on Israel. Iran has delivered an ultimatum: all Israeli troops must leave Lebanon within ten days. If any remain after ten days, or if any return within the calendar year, Iran will invade, and may use nuclear weapons to support an invasion.

What do you do now?

Still do nothingSee how things pan out. Iran has postured a lot in the past, and the threat may still fail to materialize.
Impose sanctions on IranSet these at a seemingly unbearable level. Make it clear that if Iran does not back down, the US will cripple the Iranian economy.
Send troops to IsraelSend the signal that the US is behind Israel and is willing to fight on Israel's behalf (without actually engaging Iran).
Invade IranIran has made it clear that it is not attentive to diplomatic signals. Only direct military confrontation will get the message across.
Launch a nuclear strike against IranIt is too risky to leave open the possibility that Iran strikes first. Additionally, Iran has made it clear that it is not attentive to diplomacy. Rather than put boots on the ground and in harm's way, keep US troops home, send a clear message, and try to cripple Iranian military and nuclear capabilities.
Lobby the UNRequest coalitional military action against Iran. Avoid making the US the sole enemy; gain international legitimacy for any military action.