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Why we're short the Hormuz Traffic Normalization Markets
We are short the Hormuz Traffic Normalization Markets. Insurance premiums on Gulf transits remain elevated, ongoing reroutes of existing ships continue to lengthen supply chains, Iran toll fees are still being assessed, the current MOU deal has not been finalized, and overall political volatility remains high. Focusing on the Jul 1 contract: we built our NO position through early-to-late May at a 53.7¢ VWAP, while the market priced normalization as a near-coin-flip - a level we believed was too high given the persistence of disruption.
Brier scoring reads lower is better, with 0.25 as a coin flip. Unweighted, the calls sit at 0.2368, barely past a coin. Contract-weighted they drop to 0.1083, so the sizing is where the accuracy lives: small positions are noise, the big ones were right. Worth noting the forecast here is the price paid, so beating a coin is not the bar. Beating the market price is, which is what the calibration curve on the stats page measures.
45 conviction markets, 71.1% market win rate, +$20,531 on $41,327 deployed (+49.7% ROI). Still a small sample, and the track record is being built in public.
What the numbers say
A few things the track record makes clear, pulled straight from the trade log.
The book's career trade so far. $12,495 deployed across 14 tickers, including CLOSEHORMUZ-26MAY at +$2,419 (321% ROI) and the B260701 normalization leg at +$3,452.
Nearly matched Hormuz across 14 markets. Headlined by the G55 length bucket at +$3,569 (236% ROI) and DHSFUND-26APR01 at +$2,105 on $717 (294%).
Of 2,883 lifetime fills, nearly four in five were maker orders. Only $76 of $966 in total fees came from maker fills, so the spread was crossed only when it mattered.
Over half of realized profit was locked in before expiry. 36 of 121 resolved markets were majority-exited before resolution, so positions were traded around, not just held as lottery tickets.
The single worst market (USA men's hockey gold) was under 6% of total profits. In 416 days and 182,301 contracts, no single position blew up the book.
March 2026 was the peak when the Hormuz closure legs cashed. Seven of eleven active months were positive, and monthly losses never exceeded −$1,828.
Sports markets cost money: −$3,587 on $15,548 deployed. Strip sports and the book is +$20,757 at a 49% ROI. The edge is geopolitics and government process, not games.
From the desk
Will the Strait of Hormuz normalize by August 1, 2026?
The Hormuz Curve: A Persistent Front-Loading Anomaly
Near-term Hormuz normalization contracts have implied a 4-5x higher monthly probability than far-dated ones for over three months, and the gap hasn't closed. Forward-rate methodology, the data, and three candidate explanations.
Term Structure Trading: Rolling short-dated vs single-leg long-dated contracts
Rolling resolved short legs returned +134.8% vs +118.3% for one long-dated leg. The rolling math, the volatility term structure, exit risk, and where the edge really comes from.
Why we're short the Hormuz Traffic Normalization Markets
Insurance premiums, ongoing reroutes, Iran toll fees, and a non-finalized MOU leave the 52% normalization implied probability looking too low.
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