Insurrection Act 24-cent cross-contract gap is pure arb opportunity
L5 (Trump invokes Insurrection Act) prices at 23¢ while L6 (identical event, different venue/expiry) prices at 47¢ — a 24-cent gap on the same underlying event, well above the 5¢ arb threshold. Buy L5 at 23¢ and sell L6 at 47¢ for a locked 24-cent spread. With Trump's approval weak and midterms approaching, the political volatility premium in L6 is overstated relative to L5's pricing of the same constitutional event.
Democrats are priced at 81-82¢ to win the House, reflecting strong structural momentum, but the Senate remains a toss-up with key races in Texas (55¢ R), Nebraska (28¢ independent), and Maine (34¢ R) creating genuine uncertainty. The Insurrection Act markets show a 24-cent gap between two identically-structured contracts (L5 at 23¢ vs L6 at 47¢), a cross-venue arb signal that demands attention. We play the Senate chaos hedge and the Insurrection Act arb simultaneously.
CatalystAny major domestic unrest event; congressional confrontation triggering executive response
RiskBoth contracts move to resolution simultaneously eliminating the spread; liquidity constraints prevent full position sizing on L5
WatchInsurrection Act invocation spread collapses: L5 rises toward L6 or L6 falls toward L5 · by 2026-12-31
sf ideas && sf book KXINSURRECTION-29-27