Traders grow surer the Iran ceasefire survives another week

The November 22 contract has climbed 12 points in seven days, and later dates price a slow, steady decay.

In one line: Neither Israel nor Iran strikes the other before 22 Nov, an outcome the 92% price still underrates.

Traders have marked up the Israel-Iran ceasefire all week. The contract on the truce holding through 22 Nov rose from 80% on 8 Nov to 92% on 15 Nov, a gain of 12 points over the 7 days. It touched a low of 76% on 8 Nov and a high of 94% on 14 Nov, and it now sits 2 points below that peak. The venue puts the past day's change at +2 points.

The contract pays Yes if neither side takes a qualifying military action, such as an air strike, against the other before 11:59pm Iran Standard Time on the listed date. The rest of the event slopes down as the dates lengthen. The 15 Nov contract trades at 98%, 18 Nov at 97%, 30 Nov at 87%, 15 Dec at 76% and 31 Dec at 69%. Each later date gives more time for a strike, so each pays out less often.

The curve holds one oddity. Traders give up 1 point between the 15 and 18 Nov dates, 5 points between 18 and 22 Nov, and 5 more between 22 and 30 Nov. That puts more danger in the run to 22 Nov than in the stretch to 30 Nov. One would expect a truce that gains credit each day it survives to show the opposite, with each day carrying less risk than the one before. The step reads as diffuse caution about those days, not a specific, dated threat.

On this reading, 92% still underrates the chance the truce holds through 22 Nov. The climb from 76% shows traders paying more for the truce each day it lasts, and the 97% on 18 Nov leaves little room for a break before then. The best case against is the curve's own step: traders may see a particular danger in those days. A qualifying air strike by either side before 11:59pm Iran Standard Time on 22 Nov would prove them right and this call wrong.