US x China Military clash before 2027?

This market prices a US-China military clash at just 10% probability over the next 258 days, yet offers an extreme 1,273.6% implied yield on "Yes" positions—a massive risk-reward asymmetry suggesting either significant underpricing or tail-risk hedging demand. The $28M open interest with only $763K daily volume indicates substantial capital trapped at these prices, and the 9/10 Cliff Risk Index warns of potential sharp repricing as the 12/31/2026 expiration approaches. The modest 1¢ spread and neutral regime score (0.341) suggest the market has found equilibrium, but the dramatic yield differential and thin liquidity could make this highly volatile if geopolitical tensions spike.

Resolution rules

This market will resolve to "Yes" if there is a military encounter between the military forces of China (People's Republic of China) and the United States between market creation and December 31, 2026, 11:59 PM ET. Otherwise, this market will resolve to "No". A "military encounter" is defined as any incident involving the use of force such as missile strikes, artillery fire, exchange of gunfire, or other forms of direct military engagement between Chinese and United States military forces. Non-violent actions, such as warning shots, artillery fire into uninhabited areas, or missile launches that land in territorial waters or pass through airspace, will not qualify for a "Yes" resolution. Intentional ship ramming that results in significant damage to (e.g., a hole in the hull) or the sinking of a military ship by another will count toward a "Yes" resolution, however minor damage (scrapes, dents) will not. Note: the China Coast Guard (CCG) is part of the Chinese military and the United States Coast Guard is part of the United States military. The resolution source for this market will be a consensus of credible reporting.

Indicators

Regime

Trade