Insurrection Act 27c cross-contract arb: L5 vs L6 same event
L5 and L6 both resolve on whether Trump invokes the Insurrection Act but are priced at 18c and 45c respectively — a 27c cross-contract gap that exceeds our 5c arb threshold by 5.4x. This is the clearest arb structure in the dataset: buy L5 at 18c and sell L6 at 45c for a locked 27c spread on the same underlying binary outcome. The L1 veto override at 5c / 5,402% IY provides a complementary high-yield satellite position — if Congress is emboldened enough to override, Insurrection Act invocation probability rises, compressing the L5-L6 spread further.
The Trump executive authority cluster shows a fragmented pricing structure: Insurrection Act markets (L5 at 18c, L6 at 45c) imply a 27c spread on what should be the same underlying probability, while the Taft-Hartley Act (L3) at 27c with 112% IY trades cheaply relative to escalating labor and trade tensions. The veto override market (L1) at 5c with 5,402% IY is an extreme tail yield opportunity given Congressional dynamics. These markets are pricing executive escalation as independent low-probability events when in fact they are correlated expressions of the same regime.
CatalystAny domestic civil unrest, labor strike, or Congressional standoff that forces Trump's hand on executive authority tools
RiskL5 and L6 resolve differently due to definitional differences in contract terms; arb does not close as expected
WatchL5-L6 spread compresses from 27c to <10c; L1 moves from 5c to 15c+ on veto override news · by 2026-12-31
sf ideas && sf book KXINSURRECTION-29-27