Deep Dive: Israel x Iran

Nothing is as it seems

This week’s deep dive is a little late due to me being staffed last minute on a live deal nearing end. But in the bright side, combing through the data room and prepping materials for the investment committee gives a lot of time to think. And there was plenty to think about. While the Middle East deep dive is still doing great in terms of high-level predictions, with the recent drama in the Middle East there are a lot of short-term markets to bet on.

This week I will go deeper into Israel’s incentives and put expected odds on attacks between Israel and Iran. I will take a look at the next month or so and model out incentives for different scenarios. An interesting piece (fun does not seem fitting to the situation currently playing out) and consequential both for the situation in the Middle East as well as the US elections.

Before I jump into the topic, a quick recap of to do list - I am due a post mortem on both Apple x OpenAI prediction and AI Safety Bill play. I will get to that as soon as I get a bit of a breather in my W-2. I will bundle them into one article, TBD if for paid only or not.

And one last organizational news - starting next week the global outlook will be divided into two parts:

1. First one will cover biggest news from previous week + high-level outlook for the next week with one or two interesting markets - available to all subscribers.

2. Second part will focus on markets ending this week as well as new markets from previous week - available to paid subscribers only.

Combing through Polymarket to pick interesting markets and providing my view on them is time consuming - I love doing it, but at the same time these outlooks have potential to provide great alpha and sound basis for trading recent events. I aim to develop markets section in more detail so all paid subscribers not only have one market with deep analysis, but also several additional markets with shorter analysis - to get the gist take a look at my Highlights section on X, where I put all my analysis. That way the transition from LARP-ing as news to full-time prediction market trading will be complete. Subscribe if you are serious about betting there.

Now let’s focus on the Middle East.

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Baseline

As always, let’s start with what is there to cover. My baseline will take into account:

• context of the recent events, from pager attack and the assassination of Nasrallah to the recent Iranian retaliation and operations in Lebanon,

• Israel’s plan for the next few months,

• US position.

After that I will take a look at a few available markets and will put my internal odds on them. So let’s get to it.

Context

As predicted, Israel is not slowing down, the war machine is on and it will take some time before the off button is available. With the Gaza campaign near the finish line it was only a matter of time before Israel turns its war machine towards Lebanon and Hezbollah.