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Iran reportedly downed two US warplanes, sharply reducing the odds of a US-Iran ceasefire by April 7 to 1% YES, down from 2% yesterday and 12% a week ago.
The market reacted quickly. The April 7 ceasefire market is at 1% YES, showing little trader confidence in a resolution. The April 15 market is at 6% YES, indicating continued pessimism. Odds for a ceasefire by April 30 fell to 18% YES, while May 31 is at 36% YES. The May 31 market saw the largest drop, sliding 10 points from 46% YES in the past day.
With $22,948 in USDC traded daily on the April 7 market, it takes $12,367 to move the price five points, highlighting the market’s sensitivity to trades. A 1-point drop at 1:49 AM showed traders’ quick reaction to Iran’s air defense capabilities.
This incident is a major setback for ceasefire prospects. Iran’s ability to down US aircraft suggests its defenses are strong, countering claims of weakened capabilities. The loss of an F-15E and an A-10 indicates Iran can still challenge US forces, reducing the likelihood of US concessions.
Traders might consider the contrarian opportunity: At 1¢, a YES share on an April 7 ceasefire pays $1 if it resolves, a 100x return. This hinges on a diplomatic breakthrough within four days, despite current tensions. Unless Oman or Qatar broker talks, odds will likely stay low.
Watch for statements from CENTCOM or the State Department. Comments from Rubio on diplomatic efforts or operational shifts from CENTCOM could significantly influence market direction.
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