Iran launched a missile attack on Kuwait, prompting the UAE to consider joining the US-led mission to secure the Strait of Hormuz. There is a 1% chance that the US and Iran will reach a ceasefire by April 7th, and an 86% chance that US forces will be in Iran by April 30th.
Traders are bearish on a short-term ceasefire, with odds on April 7 now down to 1% from 12% last week. A similar decline was seen in the market on April 15th, with YES falling to 6%. It remained at 18% on April 30, indicating that traders see little chance of a ceasefire amid rising tensions.
Conversely, the likelihood that U.S. forces will invade Iran by the end of April has risen to 86% from 58% a week ago. The UAE’s involvement in securing the Strait of Hormuz, which signals imminent military action, is contributing to the increase. The market for troops entering Iran by December 31st also rose to 90% YES.
USDC trades on the ceasefire market totaled $430,773 in the past 24 hours, and $12,367 would be needed to move the April 7 price by 5 percentage points. For the US military market, the volume was even higher at $5,069,224, and $85,204 would be needed to move the April 30 odds by the same margin. This shows traders’ strong belief in military escalation.
Iran’s aggressive actions and the UAE’s alignment with the United States reduce the chances of a diplomatic solution. If the YES stock is resolved in the ceasefire market on April 7th, it will pay $1, but since the price is 1 cent, the market sees this outcome as highly unlikely.
Keep an eye on CENTCOM’s statements and UAE military movements. Changes in operational language or force deployment can impact these markets.
Markets affected
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