Traders see the Israel-Iran ceasefire holding to mid-November
The November 15 contract climbed 23 points in a week to 91%, while later dates trade lower.
In one line: Neither Israel nor Iran strikes the other before 15 November, a week the 91% price still underrates.
Traders lifted the odds that the ceasefire between Israel and Iran holds through November 15 from 68% on 2 Nov to 91% on 9 Nov, a rise of 23 points over the 7 days. The climb followed a scare. The contract fell to 52% on 3 Nov, gained 39 points from that low to a high of 92% on 8 Nov, and added 2.5 points in the last 24 hours.
The contract pays Yes unless Israel or Iran takes a qualifying military action, such as an air strike, against the other before 11:59pm Iran Standard Time on 15 Nov. The other dates in the event trace a falling curve. November 6 and November 7 trade at 100%. Later dates fall away: 80% for November 22, 72% for November 30, 61% for December 15 and 55% for December 31. Traders see the coming week as safe and the year's end as barely better than even.
The reporting bears on the truce without being about it. The New York Times reported on 8 Nov that Donald Trump is weighing difficult options to resolve the deeply unpopular war in Iran. Firstpost argued the same day that his midterm defeat has not stripped him of executive power but has made his foreign-policy decisions harder to judge. Those options cut both ways, towards a deal or towards escalation, and the curve prices that doubt: the further out the date, the more time Washington has to choose.
The ceasefire holds through 15 November, and the price underrates it. Seven days is a short window, and a president weighing how to end an unpopular war has little reason to welcome a fresh Israeli-Iranian exchange before he chooses. The best case against is the drop on 3 Nov, which showed how fast fear returns; a decision in Washington to escalate would make it right. A reported Israeli or Iranian air strike on the other before 11:59pm Iran Standard Time on 15 Nov would prove the call wrong. A week without strikes keeps a second front shut while Mr Trump decides how to end the war in Iran.