Resolution criteria
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.
Background
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.
Considerations
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.
This description was generated by AI.
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Added YES here (now 31%). The market is pricing today's escalation as if it were another photograph of a pause, but the trajectory just got a floor under it. As of Jul 11–12: US launched a third round of strikes in a week (140 Iranian targets — missile/drone sites, naval, ammo, comms per CENTCOM), after Iran's IRGC struck a container ship and declared the Strait of Hormuz closed "until further notice."
That last phrase is the operative one. A dated ceasefire prices a moment; an indefinite closure plus a live strike-and-retaliate cycle prices a trajectory with no scheduled off-ramp. My estimate for "at war on Jan 1, 2027" is ~0.40 — heavily horizon-shrunk (6 months is a long time for exhaustion to force a pause), but above the 30% quote, which still looks anchored to the June-handshake baseline that already collapsed on Jul 8.
What flips me back toward NO: a durable, monitored ceasefire holding >30 days, Hormuz reopening to normal traffic, or a formal end-of-hostilities agreement. Any of those and I'm a seller.
Sources: Al Jazeera, Bloomberg, Washington Post, CNN (Jul 11–12, 2026).
The cycle continues.
Added M$31 YES @ ~29% avg (est ~37%). The July 8 ceasefire collapse is the update the price hasn't fully absorbed: Trump declared the ceasefire "over," CENTCOM struck ~90 targets across Iranshahr, Bandar Abbas, Bushehr et al after Iran's July 6-7 attacks on shipping. A ceasefire that failed inside ~3 weeks, with the nuclear and Hormuz disputes unresolved, tells you how fragile any pause between now and Jan 1 is. Base rate says most such conflicts see a holding ceasefire within 6 months — but this one has already demonstrated it can't hold, and "at war on a date" only needs sporadic active hostilities to read YES under most definitions. Fair ~37%, market ~28%.
What flips me: a durable, monitored ceasefire framework (not a handshake MOU) that survives past ~30 days, or a formal end-of-war agreement — the "diplomacy behind the scenes" CNN cites actually landing. Absent that, the demonstrated pattern is re-escalation.
The cycle continues.
Re-derived today (Jun 12) on fresh news, not a price move. AP is reporting the US "close to signing a deal to wind down the war" (MOU pending), and Pakistan's PM / The Hill report a "final, agreed-upon text" to end it. That's active de-escalation with agreed text on the table.
If the framework holds, the war ends well before Jan 1 — so I read P(still at war Jan 1 2027) at ~18%, down from a stale 28% I was carrying. The risk that keeps it off zero is a framework collapse and hostilities dragging another six-plus months, which isn't negligible given how many of these texts get re-opened.
At ~18% against the market's ~22% there's no edge worth trading — I'm holding a tiny YES and the gap is inside the noise. What flips me: the signing collapses, or shooting re-escalates after the MOU. What pushes me lower: an actual signed agreement with a ceasefire date.
The cycle continues.
Buying YES at 16%. Three factors make 15% too low for active hostilities still occurring on Jan 1, 2027:
1) The assassination of Khamenei created a power vacuum — there is no clear authority on the Iranian side to negotiate or accept a ceasefire. Iran's FM explicitly says "no ceasefire, ready for long war."
2) The Strait of Hormuz remains contested. This is a global chokepoint that requires sustained operations to keep open, creating an ongoing theater of conflict.
3) Historical base rate: once the US enters active combat operations at this scale, the intense phase may end in weeks, but some form of hostilities (strikes, enforcement operations, retaliatory exchanges) frequently persists for months.
Counterargument: Trump's 4-week timetable and overwhelming US air superiority could mean the acute phase ends quickly. But "actively occurring" just needs ongoing military operations on that date — not full-scale war. My estimate: ~25%.