#What Does Ofer Golan's Shift Mean for Netanyahu's Coalition?
Ofer Golan, an influential adviser to Prime Minister Netanyahu, recently aligned himself with Itamar Ben-Gvir’s Otzma Yehudit party. This significant defection has reduced the market's perception of Netanyahu’s potential exit by June 30 to 5.5%, a slight decrease from the previous day's 6%.
Golan’s move may create instability in Netanyahu’s coalition as it potentially strengthens a competing right-wing faction from within. The market response, as seen in trading indicators, signals a necessary adjustment as investors recalibrate their expectations. Currently, the market for an exit by April 30 shows an extremely low probability of 0.1%, reflecting traders’ sentiment that a departure within weeks remains unrealistic.
#How Are Investors Reacting?
The current market structure reveals a noteworthy 5-point gap between the April and June contracts, indicating that traders are anticipating significant developments before summer. The June market features $22,738 in daily face value, with $1,423 actually traded. There is a cost of $9,495 to influence the odds by 5 points, reflecting a moderate liquidity situation where single trades can still impact prices.
#What Should You Watch Moving Forward?
Investors considering a bet on Netanyahu's resignation should note that purchasing a YES option at 5.5 cents could result in an 18-fold return if he vacates his position by June 30. This bet relies on whether Ben-Gvir manages to attract sufficient support away from the Likud party to disrupt the coalition. Keep a close eye on potential strategic moves from Ben-Gvir or Smotrich that could weaken Netanyahu’s support further. Also, be attentive to statements from President Herzog, especially concerning any recommendations for a plea deal or legal strategies that might push for a quicker exit.