Daily Market Mispricings: 2 Geopolitical Events Where We Disagree With Polymarket — May 18, 2026

TL;DRNaly’s clearest disagreements on May 18, 2026 are the June 30 airspace-closure markets in Iran and Israel. Polymarket prices Iran closure at 63c YES and Israel closure at 60c YES, but we mark both closer to 35c YES. The sharpest reason is that traders are overweighting headline tension while underweighting the harder causal step from fragile ceasefire to formal renewed nationwide closure.

Polymarket is still pricing a high chance that wartime aviation disruption turns back into official closure before June 30. We think that overstates what must actually happen for these contracts to resolve YES. Once authorities reopen airspace and commercial operations restart, the bar for a new closure is not "tension stays high." It is a fresh decision by state authorities to shut civilian air traffic again, and that usually requires a much more severe operational trigger than the market is currently discounting.

Key Takeaways

Naly disagrees with Polymarket on both selected geopolitical events and flips to NO as the higher-probability answer in each case.

The market appears to be extrapolating war headlines and airline caution more aggressively than formal closure mechanics justify.

Reopening evidence matters more than traders are crediting: resumed terminals, resumed flights, and regulator normalization all raise the threshold for a new shutdown.

The key catalyst for Polymarket to be right is a material regional military escalation that directly forces aviation authorities to re-close national airspace.

Until that escalation happens, we think the fair value on YES remains materially below market price in both contracts.

2 Mispricings at a Glance

Event Snapshot

Iran closes its airspace by June 30?

Buy NO Resolves June 30, 2026 Open 82% confidence

Polymarket Top Answer YES

Naly Top Answer NO

Max Payout if Correct +63c

0c 50c $1.00

Polymarket Naly

Why we disagree: Traders are pricing fragile ceasefire risk as if it were already a fresh shutdown decision, despite reopened airspace and resumed Tehran commercial flights.

Event Snapshot

Israel closes its airspace by June 30?

Buy NO Resolves June 30, 2026 Open 84% confidence

Polymarket Top Answer YES

Naly Top Answer NO

Max Payout if Correct +60c

0c 50c $1.00

Polymarket Naly

Why we disagree: The market is treating airline caution as equivalent to state closure risk, but routine Ben Gurion operations and phased airline returns imply a higher bar for a full re-closure.

How to read this: Polymarket Top Answer and Naly Top Answer show the final answer each side sees as most likely. Max Payout if Correct shows the gross upside from the current quote to the $1 settlement if the selected contract side wins. The horizontal graph still shows where that selected side sits on a 0c to $1 range for Polymarket versus Naly.

Event 1

Iran closes its airspace by June 30?

GeopoliticsContract · Buy NOResolves June 30, 2026Open82% confidence

+63c

Max Payout if Correct

Polymarket Top Answer YES

Naly Top Answer NO
Trade on Polymarket →

The quoted market price here refers to the YES side of a $1 binary contract: at 63c YES, traders are paying about 63 cents for a contract that pays $1 if Iran closes its airspace by June 30, 2026. Our 35% YES estimate implies a 35c fair price on that same YES side, which means the answer flip is real: Polymarket’s top answer is YES, while ours is NO. If you express the trade on our preferred side, that is effectively NO at 37c market versus 65c fair value, where max payout if correct is 63c and fair-value edge is 28c.

Causal Chain

Cause Iran has already moved from wartime shutdown toward partial reopening and resumed commercial departures from Tehran, which means the market is no longer starting from a closed baseline.

↓

Effect For YES to resolve, regional tension must convert into an official renewed closure decision, not merely continued military rhetoric or airline caution.

↓

Projection Our projection is that the path from "fragile ceasefire" to "formal nationwide closure by June 30" is materially less likely than traders imply.

Key Factors

| Factor
▲ | Iran’s civil aviation system partially reopened in April, which is direct evidence against a baseline assumption of sustained closure.
▲ | Commercial flights resumed from Tehran’s Imam Khomeini airport on April 25, creating operational inertia toward continued partial service.
▲ | ICAO’s April regional report said all affected flight information regions had reopened, even if traffic patterns remained abnormal.
▼ | President Trump’s May 17 warning that Iran could be hit harder raises re-closure risk, but rhetoric alone is still one step removed from a fresh civil aviation shutdown.
▲ | Shipping and aviation stress across the region can keep routes thin, insurers cautious, and permissions tighter without necessarily triggering an official Iranian closure.

Bayesian Calculation

Base rate: We start from a wartime-reopening base where a country that has already restored some civilian aviation is less likely than not to reverse into a full closure inside six weeks.

Positive update: Trump’s May 17 warning and the broader possibility of renewed U.S. or Israeli strikes increase the chance that Iran re-closes airspace for safety or military reasons.

Negative update: Partial reopening, resumed Tehran commercial flights, and ICAO’s reopened-FIR backdrop all argue that authorities are trying to normalize operations rather than shut them again.

Naly estimate: 35% YES, which implies a 35c fair price for YES and 65c for NO.

Alternative explanation: The market may simply believe this contract resolves on a much lower threshold than we do in practice: one sharp escalation, one new wave of missile exchanges, and Tehran could decide even a short-lived closure is preferable to uncertain civilian risk. That is plausible, but we think traders are pricing that branch as the base case rather than the tail case.

What Would Make Us Wrong

A direct renewed U.S.-Iran or Israel-Iran military exchange that materially threatens civilian corridors would likely force Iranian authorities back into closure quickly. A formal NOTAM-driven shutdown, even if temporary, would be enough to validate the market’s higher YES pricing.

Fresh Checks

Al Jazeera: Iran resumes commercial flights from Tehran airport

ICAO MID Report, April 2026

Axios: Trump warns Iran "clock is ticking" until U.S. launches harder strikes

Event 2

Israel closes its airspace by June 30?

GeopoliticsContract · Buy NOResolves June 30, 2026Open84% confidence

+60c

Max Payout if Correct

Polymarket Top Answer YES

Naly Top Answer NO
Trade on Polymarket →

The quoted market price again refers to the YES side of a $1 binary contract: 60c YES means the market is implying roughly a 60% chance that Israel closes its airspace by June 30, 2026. Our estimate is 35% YES, or 35c fair value on that same YES side, so this is also an answer flip rather than a small confidence adjustment. On our preferred expression, the trade is NO at 40c market versus 65c fair value, with max payout if correct at 60c and fair-value edge at 25c.

Causal Chain

Cause Israel has already shifted from emergency wartime restrictions back toward routine Ben Gurion operations and phased airline normalization.

↓

Effect The market appears to be translating foreign-airline caution into state-level closure probability, but those are different mechanisms.

↓

Projection Our projection is that Israel is more likely to remain open but capacity-constrained than to re-enter a full closure before June 30.

Key Factors

| Factor
▼ | The Israel Airports Authority said international and domestic flights were operating from Terminal 3 in late April, which is strong evidence of functional reopening.
▲ | Foreign airlines are returning in stages, showing that the operating environment is cautious but not shut.
▲ | Wizz Air said on May 13 it would resume Tel Aviv service on May 28, another concrete sign that carriers still see a path to service.
▼ | Some major airlines remain cautious or delayed, but that mainly reflects risk management and insurance judgment, not proof that Israeli authorities are close to closing airspace again.
▲ | For this market to resolve YES, security deterioration must become severe enough that Israel itself re-closes airspace, not merely that some carriers postpone their return.

Bayesian Calculation

Base rate: After a formal reopening, the default path is constrained normalization, not immediate reversal into another nationwide airspace closure.

Positive update: Regional tensions remain high, and carrier hesitancy shows the risk backdrop is still abnormal.

Negative update: Routine Terminal 3 operations, resumed domestic and international movement, and additional airline returns all push against a fresh closure as the central case.

Naly estimate: 35% YES, implying 35c fair value for YES and 65c for NO.

Alternative explanation: The bullish YES case is that Israel’s airspace is structurally one escalation away from renewed shutdown because the conflict environment remains highly unstable and Ben Gurion is such a critical node. That view is coherent, but it still assumes a sharper deterioration than current operating evidence supports.

What Would Make Us Wrong

A large missile or drone event that forces Israeli authorities to suspend civilian aviation systemwide, or a major widening of the regional war that overwhelms the current phased-reopening model, would invalidate our NO lean quickly. This market is mostly about escalation mechanics, not airline sentiment.

Fresh Checks

Israel Airports Authority: Ben Gurion notifications and updates, April 23, 2026

Reuters via Sahm Capital: Wizz Air to resume flights to Israel on May 28

Israel Hayom: American Airlines pushes Tel Aviv return to 2027

Conclusion

The watchpoint into the end of June is simple: does headline tension convert into an official aviation reversal? For Iran, the catalysts are renewed U.S. or Israeli strikes and any fresh closure notices. For Israel, the catalysts are a security event severe enough to force authorities back from constrained normality into systemwide shutdown. Until one of those catalysts lands, we think both markets are pricing too much closure risk.

Methodology

Naly’s geopolitical mispricing roundups use the same discipline as our finance roundups: start with the market-implied probability, identify what exact state change must happen for the contract to resolve, update that base rate with fresh evidence, and convert the result back into a fair cents price on the same binary contract. We track whether those probability calls beat the market over time at Naly’s track record.

Disclaimer

This article is for informational and research purposes only, not investment, legal, or travel advice. Prediction markets are volatile, contract wording matters, and geopolitical situations can change quickly on new military, regulatory, or diplomatic developments.