Insurrection Act cross-contract 19c gap demands a convergence trade
L5 prices Insurrection Act invocation at 23c while L6 prices the same underlying event at 42c — a 19c gap on identical resolution criteria, exceeding the 5c cross-venue arb threshold. Buy L5 at 23c and sell L6 at 42c for a near risk-free 19c spread. With M16 (US commercial launches) down 65 delta and macro risk-off accelerating, political volatility is rising, making convergence to fair value likely before year-end.
Legislative catalyst markets show Trump's executive action probabilities are priced with wide dispersion across venues, with Insurrection Act contracts ranging from 23c to 42c — a 19-point cross-reference gap suggesting systematic mispricing. With oil surging, VIX elevated, and risk-off conditions prevailing, the probability of aggressive executive action rises nonlinearly, while Congress override markets at 10-30c offer asymmetric long exposure to institutional pushback.
CatalystAny domestic unrest event or Trump policy escalation triggering Insurrection Act discussion
RiskContracts resolve on different criteria or venues; legal interpretation divergence
WatchL5 reprices to 35c+ and L6 falls to 35c (convergence at fair value ~35c) · by 2026-12-31
sf ideas && sf book KXINSURRECTION-29-27