Insurrection Act 23-point cross-venue arb — L5 vs L6 spread trade
L5 prices Insurrection Act invocation at 21c on one venue while L6 prices the same event at 44c — a 23-point cross-venue gap that exceeds our 5c Signal Priority 1 threshold by 4.6x. Both contracts have positive IY (779 and 50 respectively). The structural explanation for the gap is liquidity differential, not information — L6's 44c is closer to fair value given the current political environment. Buy L5 at 21c, effectively capturing 23c of arb premium on identical binary outcomes.
Markets are pricing extreme complacency on executive action risk: Congress veto override sits at 10c (L1) while Insurrection Act invocation ranges 21-44c across venues (L5, L6) — a 23c cross-venue gap that is our most actionable policy arb. With NATO media availability active (M1 at 64c, +58 delta) and Trump's bilateral Turkey meetings in flux (M5 at 13c, -55 delta), the policy signal is noisy but skewed toward surprise. This is a contrarian theme against the consensus view that executive power remains constrained.
CatalystAny domestic unrest event; Trump executive action announcement; congressional confrontation
RiskL6 is the mispriced leg and corrects downward to 21c; different resolution criteria across venues
WatchL5 reprices to converge with L6 above 35c, or event resolves Yes on either venue · by 2026-12-31
sf ideas && sf book KXINSURRECTION-29-27