Iran has made it clear that they question the credibility of the former US President, emphasizing that any agreement regarding the lifting of the blockade at the Strait of Hormuz needs to be transparently communicated by the US government. Currently, there is an 85.5% probability that this announcement will happen by May 31, 2026.
This assertion from Iran raises doubts about the potential for an early resolution to the blockade situation. Over the past week, the likelihood percentages have fluctuated between 76% and 83%. The market has been showing a daily liquidity of $18,073 in USDC, with approximately $9,244 needed to shift the market odds by 5 points. While trading activity has been stable, a notable increase of 3 points occurred at 5:08 PM, elevating the odds from 84% to 87%.
Why does this matter to investors?
Iran’s demand for public acknowledgment and unrestricted passage for tankers highlights a deep-seated mistrust in the negotiations. The narrow range in odds reflects traders' views that no significant shift in US policy is imminent. With just 41 days remaining until the May 31 deadline, the ongoing diplomatic stalemate appears to be already factored into the market expectations.
What should traders watch for?
Historical volatility in this market is low, indicating that traders do not anticipate an abrupt resolution. Current odds at 85.5¢ indicate that a YES bet could return 1.21 times the investment if Trump successfully announces the blockade lift by the deadline, contingent on a substantial diplomatic breakthrough occurring within the 41 days.
Keep an eye out for any public comments from Iranian Foreign Minister Abbas Araghchi or US Navy officials. Changes in the language used during operations or the confirmation of a meeting date could significantly influence the odds involved in these negotiations.