US-Iran ceasefire odds plummet as tensions rise over Strait of Hormuz

Iran’s enforcement of new rules in the Strait of Hormuz has heightened tensions, with the US dismissing Iran’s ceasefire conditions. The odds of a ceasefire by April 7 have dropped to 1.1% YES, down from 12% last week.

The market for a US-Iran ceasefire by April 7 shows just a 1% chance. Odds for April 15 have decreased to 6.5% YES, while April 30 is at 17.5%. The sharpest decline is in the short term, indicating traders doubt a quick resolution. April 30 and May 31 show a notable jump, suggesting traders expect a potential catalyst in late April.

Traders have invested $430,689 in USDC into this market, with $12,758 needed to shift the odds by 5 points for April 7. The largest recent move was a minor 2-point spike for April 30, indicating no major new developments. The April 15 order book depth, requiring over $41,000 to move odds by 5 points, suggests institutional interest.

Iran’s control over the Strait of Hormuz poses significant geopolitical risks, affecting about 20% of global oil. The market’s steep decline in short-term ceasefire odds reflects this. For a YES share at 17.5% for April 30 to be profitable, traders must believe in a diplomatic breakthrough within 27 days. Given the current standoff and US operations, this seems unlikely without external mediation.

Watch for diplomatic efforts from Oman and Qatar or unexpected conciliatory moves from either side. A statement from CENTCOM or a change in US rhetoric could also influence these markets.