I feel very inconsistent in my assigning of probabilities with this and a relevant market when using my expected number of (profitable) chances to update as a clue to what I should set my deferral % when betting....

In the above relevant market I defer more there than in this market since the uncertainty is only in the next 3 days and there are less chances to update when compared to this market, but in this market I don't know whether to use that above market probability or my own probabilities for it when considering the probabilities for this market (which gives me two completely different directions to bet) and as there are more chances to update with this market this also leads to vastly different sized bets.

https://www.cnn.com/2023/09/06/weather/hurricane-lee-potential-path-atlantic-climate/index.html

Lee strengthens into a hurricane and could reach Category 5 strength in record-warm Atlantic | CNN

Lee has strengthened into a hurricane as it moves over a record-warm Atlantic, with 75 mph sustained winds, according to a 5 p.m. EDT advisory from the National Hurricane Center.

Here are the (imo) two at least a bit likely-ish options. About 500 miles of eastern(-ish, I counted the FL Keys) coastline for Florida vs. 488 miles of Atlantic beauty for the Carolinas.

@sarius and yet the sum of percentages of these two markets is often larger than the percentage of this market, which makes no sense. Someone do some arbitrage, I'm already sufficiently exposed.

@NicoDelon Doesn't make sense to do a sum. Just take which ever has the higher probability. Right now, considering Lee, I don't think track wise there is strong evidence for YES (especially as the latest ECMWF model shows Lee's extended track moving further east), but it is still too far out to tell.

@parhizj Why doesn’t it make sense? There are more states in the US than Florida and the Carolinas. (I guess the sum could be higher if multiple hurricanes make landfall since the US one would resolve with just one).

@NicoDelon To add those markets I believe you generally (simplifying a bit) would have to make two assumptions:

1) assume there is only one storm that constitutes those states' markets probabilities (it is possible to have one storm hitting Florida and another storm hitting the Carolinas or other states, but you would have to assume that is not the case) (this assumption might make more sense later in the month)

2) assume that the probabilities for the single storm hitting each state are all disjoint (it is possible to have multiple landfalls for a single storm but you would have to assume that is not the case) (this assumption might make sense depending on the track of a storm)

As it is ~ peak of the Atlantic hurricane season right now and only September 8, I don't think you can hold the first assumption ... at least for right now.

@parhizj yeah, I'm aware of the first assumption (see my comment). That's totally fair, though I still think the US market shouldn't be lower than any of those markets (for a while it was lower than Florida). The second assumption doesn't really apply to the Florida/Carolinas case since they don't share a border, but marginally I guess it could explain some of difference.

@NicoDelon For the second assumption, it looked for a while to me with Idalia for instance that it could have possibly stayed strong enough to go back out into the Atlantic and make landfall again as a weak cat I hurricane on Charleston, SC or Savannah, GA.

@parhizj Yup. I recently moved from the Tampa Bay area to Charleston, SC, so I was keenly aware of that possibility. LOL. That's still a single digit probability at most, right?

@NicoDelon Yeah it probably was.

Going by base rates (and ignoring Invest 95L which is too far out to predict a hit for this question):

Landfall Hurricanes in Sep 1991-2022

Category 1 total in Sep 1991-2022: 5

Category 2 total in Sep 1991-2022: 8

Category 3 total in Sep 1991-2022: 4

Category 4 total in Sep 1991-2022: 2

Category 5 total in Sep 1991-2022: 0

Total Hurricanes making landfall in Sep 1991-2022: 19

Hurricanes per year in Sep 1991-2022 : 0.59

Expected probability (poisson) of exactly 0 landfalling hurricanes (PMF) based on averages in Sep 1991-2022: 0.552

That puts the base probability at 45% for this question.

@parhizj This confirms that /AliciaGrugett/will-a-hurricane-hit-the-state-of-f is still overpriced.

@NicoDelon Assuming my code is good and I am correct by not incorporating Invest 95L or other data (don’t know what else to look at)