Insurrection Act Invocation at 21-41c Diverges Across Venues — Arb
L5 prices Trump invoking the Insurrection Act at 21c (IY 964) while L6 prices the same question at 41c — a 20-cent cross-contract gap on what appears to be equivalent questions, exceeding the 5c arb threshold materially. Buy L5 at 21c and sell L6 at 41c for a near-riskless 20c spread if contracts resolve identically. Separately, L3 (Taft-Hartley invocation at 25c, IY 123) provides a correlated directional hedge as executive overreach probability rises in tandem.
Congressional override of Trump's veto and invocation of emergency executive powers trade at deeply depressed prices (9-41c) despite annualized yields of 59 to 2,592 — signaling chronic market underpricing of tail political risk. With House control leaning Democratic at 83-85c and Senate a toss-up, the structural conditions for an override attempt or executive escalation are building. These are low-probability but high-consequence events where even small probability upgrades generate outsized returns.
CatalystDomestic unrest event, labor strike, or border enforcement escalation triggering emergency powers consideration
RiskContract resolution criteria differ between L5 and L6 (different timeframes or conditions), collapsing the arb; no triggering event materializes
WatchL5 resolves YES (Insurrection Act invoked) and L6 spread narrows to <5c · by 2026-12-31
sf ideas && sf book KXINSURRECTION-29-27