Iranian vessel challenges US blockade in Strait of Hormuz, risks escalation

An Iranian vessel entered international waters and challenged the US naval blockade in the Strait of Hormuz, pushing the odds of UK warships transiting the strait by April 30 to 8% YES, up from 5% a week ago.

Market reaction

Traders are pricing in a higher likelihood of allied nations like the UK sending warships to ensure freedom of navigation in the April 30 market. The odds for Trump’s blockade announcement by May 31 remain at 81.5%, though the Iranian vessel’s challenge makes an immediate lifting less likely.

The April 15 market for Trump announcing the blockade lift sits at 8% YES, showing skepticism over a quick resolution. The April 19 market is slightly higher at 32% YES.

Why it matters

The warships market trades $42,409/day in face value but only $5,386/day in actual USDC, with $641 needed to move the price 5 points. The largest move was a 2-point spike, indicating cautious but attentive positioning. This incident could delay normalization of traffic through the Strait of Hormuz.

What to watch

A YES share in the warships market at 8¢ pays $1 if it resolves, for a potential 12.5x return. For this bet to make sense, you’d need to believe in a significant escalation leading to UK involvement within 17 days.

Watch for statements from national defense ministries and new deployments in the region. IRGC actions or Trump’s statements on Truth Social could also move these markets.

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