Daily Market Mispricings: 2 Geopolitical Events Where We Disagree With Polymarket — May 21, 2026

TL;DROn May 21, 2026, Naly’s clearest geopolitical disagreement is Israel’s airspace: Polymarket prices YES at 60c that Israel closes it again by June 30, while our fair price is 28c. We also lean against a June lifting of the U.S. Hormuz blockade, with market YES at 58c versus our 35c. The common driver is mean reversion after acute crisis conditions ease.

Geopolitical contracts often stay anchored to the most vivid recent shock. Our process is to separate the current state from the path required for resolution, then price the catalysts that would actually have to happen before June 30, 2026. In both markets below, we think Polymarket is still overpaying for a second dramatic move rather than the more boring base case of partial normalization.

Key Takeaways

Naly’s strongest answer flip is Israel airspace: market YES 60c versus our YES fair value 28c, implying NO remains our top answer.

We also disagree with the market on a June lifting of the U.S. Hormuz blockade: market YES 58c versus our YES fair value 35c.

In both cases, the market appears to overweight headline memory and underweight how institutions behave once crisis operations are already being normalized.

Our edge is causal, not rhetorical: reopening processes, deterrence incentives, and bargaining leverage all point toward slower reversals than Polymarket is pricing.

2 Mispricings at a Glance

Event Snapshot

Israel closes its airspace by June 30?

YES Resolves June 30, 2026 Open 85/100 confidence

Polymarket Top Answer YES 60%

Naly Top Answer NO 72%

Max Payout if Correct +40c

0c 50c $1.00

Polymarket Naly

Why we disagree: Airspace is already back in normalization mode, so a fresh nationwide closure needs a new escalation path the market is pricing too casually.

Event Snapshot

Will Donald Trump announce that the United States blockade of the Strait of Hormuz has been lifted by June 30, 2026?

YES Resolves June 30, 2026 Open 80/100 confidence

Polymarket Top Answer YES 58%

Naly Top Answer NO 65%

Max Payout if Correct +42c

0c 50c $1.00

Polymarket Naly

Why we disagree: The blockade is still active leverage, and active enforcement makes a formal lifting announcement materially less likely than the market implies.

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

Israel closes its airspace by June 30?

GeopoliticsContract · YESResolves June 30, 2026Open85/100 confidence

+40c

Max Payout if Correct

Polymarket Top Answer YES 60%

Naly Top Answer NO 72%
Trade on Polymarket →

The quoted market price here is for the YES side: at 60c, a trader is paying about $0.60 now for a binary contract that pays $1 if Israel closes its airspace by June 30, 2026. Our 28% estimate translates to a 28c fair price on that same YES side. That means our disagreement is an answer flip, not just a confidence tweak: we prefer NO. The max payout if the YES side wins is 40c of profit from a 60c entry, while the fair-value edge in our framework sits on the opposite side because we think NO is underpriced.

Causal Chain

Cause Israel’s airspace is no longer in emergency closure mode; the operating baseline has shifted back toward managed civilian traffic.

↓

Effect Once airports, regulators, and airlines are already executing a reopening sequence, a fresh nationwide closure requires a new military shock, not just lingering anxiety.

↓

Projection That makes a re-closure by June 30 a tail-risk branch rather than the median path, so the market’s YES price looks too high.

Key Factors

| Factor
▲ | The Israel Airports Authority said after the ceasefire that Ben Gurion was returning to routine operations and later confirmed international and domestic flights were operating from Terminal 3.
▲ | The same authority published notices on April 12 that foreign airlines were returning during the week, which is not how systems behave when policymakers expect an imminent second shutdown.
▲ | Reuters footage from April 9 showed passengers returning as activity normalized after the ceasefire, reinforcing that the immediate post-war direction was reopening, not renewed closure.
▲ | A 45-day extension of the Israel-Lebanon ceasefire, reported by Reuters on May 15, lowers the near-term probability that the northern front alone forces a nationwide aviation halt before June 30.
▼ | The market appears to be pricing “regional war risk still exists” as if it were the same thing as “airspace closes again soon,” but those are not equivalent events.

Bayesian Calculation

Base rate: Start from the current open-airspace baseline, not from the wartime closure regime.

Positive update: Residual missile and escalation risk remains real, especially if Iran or Hezbollah reopens a high-intensity exchange.

Negative update: Official reopening steps, resumed airline operations, and continued normalization all reduce the odds that authorities reverse course within six weeks.

Naly estimate: 28% YES, implying 28c fair value on the quoted contract side and 72% for NO.

Alternative explanation: The market may be assuming that even a limited flare-up would trigger a precautionary airspace shutdown because civilian aviation is hypersensitive to missile risk. That is plausible, but it still requires a new escalation event, not merely unresolved tension.

What Would Make Us Wrong

A major ceasefire breakdown, direct Iranian missile salvos, or a Hezbollah escalation that overwhelms Israel’s risk tolerance for civil aviation could force authorities to close airspace again quickly. If security conditions deteriorate faster than airline and airport normalization can absorb, our NO view would fail.

Fresh Checks

Israel Airports Authority: international and domestic flights departing Terminal 3

Israel Airports Authority: foreign airlines returning to Ben Gurion during the week of April 12

Reuters Connect: passengers return as Ben Gurion activity normalizes after ceasefire

Reuters: Israel and Lebanon agree to extend ceasefire by 45 days

Event 2

Will Donald Trump announce that the United States blockade of the Strait of Hormuz has been lifted by June 30, 2026?

ForecastContract · YESResolves June 30, 2026Open80/100 confidence

+42c

Max Payout if Correct

Polymarket Top Answer YES 58%

Naly Top Answer NO 65%
Trade on Polymarket →

The quoted market price here is again the YES side: at 58c, the market is implying roughly a 58% chance that Trump will announce the blockade has been lifted by June 30, 2026. Our estimate is 35% YES, which maps to a 35c fair price on the same side. So this is another direct answer flip: the market’s top answer is YES, while ours is NO. The trader’s max payout on YES is 42c of profit from a 58c entry, but our fair-value edge is on NO because we think the blockade remains more likely to stay in force than the market assumes.

Causal Chain

Cause The blockade is not just a military posture; it is one of Washington’s main bargaining chips in forcing Iranian concessions.

↓

Effect As long as enforcement actions continue, announcing a lift would mean voluntarily surrendering leverage before a durable settlement is visible.

↓

Projection That keeps “lifted by June 30” below coin-flip odds even if diplomacy continues, because negotiation progress and formal lifting are different milestones.

Key Factors

| Factor
▲ | Reuters reported on April 29 that the U.S. was discussing how to continue the current blockade for months if needed, which argues against a near-assured June reversal.
▲ | AP reported on May 20 that the U.S. military boarded an Iranian-flagged tanker suspected of violating the blockade, showing active enforcement rather than wind-down behavior.
▲ | AP also reported on May 19 that Trump’s Iran policy had hit a wall, meaning the political conditions for a clean de-escalatory announcement were still missing.
▲ | AP coverage from May 14 described continued maritime turmoil around Hormuz, reinforcing that operational instability remains high.
▲ | The market may be overweighting the existence of talks and underweighting the fact that announcements usually come after leverage has extracted visible concessions.

Bayesian Calculation

Base rate: Coercive maritime measures usually persist until negotiators can point to a concrete settlement, not merely ongoing talks.

Positive update: There is still enough calendar time for diplomacy to produce a package that includes a reopening announcement before June 30.

Negative update: Continued boarding operations and public discussion of sustaining the blockade make a formal lifting announcement meaningfully less likely in the near term.

Naly estimate: 35% YES, implying 35c fair value on the quoted contract side and 65% for NO.

Alternative explanation: The market could be right if back-channel diplomacy is further advanced than public reporting suggests and Washington wants a symbolic de-escalation headline before June 30. A face-saving announcement could arrive even before underlying tensions are fully resolved.

What Would Make Us Wrong

If Iran offers credible shipping guarantees, a broader ceasefire package firms up, or oil-market pressure pushes the White House toward a visible de-escalation win, Trump could choose to announce the blockade’s lifting sooner than our model expects. In that case, the market’s emphasis on headline timing would beat our leverage-first framing.

Fresh Checks

Reuters: U.S. sought international help to reopen the Strait of Hormuz while discussing sustaining the blockade

AP: U.S. military boards Iranian-flagged tanker suspected of breaching blockade

AP: Trump’s Iran strategy is hitting a wall as Tehran grips the Strait of Hormuz

AP: tensions flare near the Strait of Hormuz as a ship is seized and another is sunk

Conclusion

The core geopolitical call on May 21, 2026 is that Polymarket is still overpricing dramatic reversals after the first shock has already passed. For Israel, the watchpoint is whether the current reopening regime breaks under a fresh military escalation. For Hormuz, the catalysts are any verified settlement terms, a shift in U.S. naval enforcement tempo, or explicit White House language moving from pressure to de-escalation. Until those change, we prefer the calmer branch in both markets.

Methodology

Naly’s geopolitical mispricing process mirrors our market roundups in finance: start with the contract wording, isolate the side being quoted, translate cents into implied probability, and then rebuild fair value from causal drivers rather than headline momentum. We compare market-implied odds with our own event tree, score the answer flip explicitly, and track whether our edge comes from timing, mechanism, or consensus overreaction. Our running calibration and historical performance are available on Naly’s track record.

Disclaimer

This article is for information and research discussion only, not investment advice or a solicitation to trade. Prediction markets can move on new facts, changing resolution interpretations, liquidity gaps, and headline risk. Always read the full market rules before trading.