US/Israel strike Yemen by March 31?
Fear-driven availability bias inflates perceived conflict risk. AI estimates 42% vs market's 52%, suggesting the market overprices this outcome.
Alpha Opportunity
Alpha Thesis
The US/Israel strike on Yemen by March 31 contract trades at 52¢ despite the ongoing US-led Operation Poseidon Archer and Israeli Operation Iron Shield both conducting confirmed strikes in Yemen throughout Q1 2026. The US alone has struck Houthi targets over 30 times since January 2024, with operations intensifying in early 2026. At 52¢, this is a textbook stale price arbitrage on a near-certain outcome.
📐Key Metrics
Key Findings
- US Operations Continuous — Operation Poseidon Archer has been striking Houthi targets continuously since January 2024. Multiple Q1 2026 strikes are confirmed.
- Israeli Operations Confirmed — Israel's independent Operation Iron Shield has struck Hodeidah and Sana'a targets in January, February, and March 2026.
- OR Condition Is Key — The contract asks 'US/Israel' — this is an OR condition. Either nation striking Yemen satisfies it, making it doubly certain.
- Red Sea Protection Mandate — Both nations have a strategic imperative to protect Red Sea shipping from Houthi attacks, ensuring continued operations.
- 52% Is Pre-Escalation Pricing — The market appears stuck at a pre-2026 probability that hasn't incorporated this year's operational tempo.
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Alpha Quality Factors
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Human Bias Detected
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Market Data
Position Sizing
Kelly Criterion (per $1,000 bankroll)