The US and Iran will be considered at war if military hostilities between the two nations are actively occurring on January 1st, 2027. This includes direct combat operations, sustained military strikes, or active armed conflict. Iran's retaliatory ballistic missile attacks on US military bases and Israel following the February 28, 2026 US and Israeli military strikes on Iran constitute evidence of active warfare. The market resolves YES if military operations continue through January 1st, 2027. The market resolves NO if a ceasefire, peace agreement, or cessation of hostilities has been established before that date, or if no active military conflict exists on that date.

Beginning in late January 2026, the United States carried out its largest military buildup in the Middle East since the 2003 invasion of Iraq, deploying air, naval, and missile defense assets amid escalating tensions with Iran, which the United States has attributed to Iran's nuclear program, the 2025–2026 Iranian protests, and a government crackdown that killed thousands of demonstrators. On February 28, 2026, the United States and Israel conducted military strikes on Iran, with the operation codenamed Operation Epic Fury by the US Department of Defense and Roaring Lion by Israel, beginning with strikes against locations in Tehran, Isfahan, Qom, Karaj, and Kermanshah. In retaliation, Iran launched dozens of ballistic missiles across the Middle East, targeting Israel and U.S. military bases in Jordan, Syria, Kuwait, Bahrain, Qatar, Saudi Arabia and the United Arab Emirates. The extent of the damages and casualties — as well as those of the Iranian response — are yet to be fully determined, as the conflict is still active.

U.S. president Donald Trump announced that the United States had launched strikes on Iran alongside Israel, declaring that the objective was to destroy Iran's missile and military capabilities, prevent it from obtaining nuclear weapons, and ultimately topple the regime. The scope and duration of military operations remain uncertain, with US officials indicating the US military is preparing for weeks-long sustained operations against Iran, not just a limited strike. The trajectory from current active hostilities to either escalation or de-escalation by January 1st, 2027 will determine the outcome.