Kalshi Politics — Mispricing Audit

Report date 2026-07-13 · Methodology v3.1 (conviction-weighted, EV-agnostic sizing, resolver-priced) · Horizon 45 days · Capital $1,000 · Picks count toward the public track record and are cleared for auto-copy.

Bottom line: this was an efficiently priced week. Out of 307 active Politics markets, exactly one pick cleared every screen — BUY NO on KXHORMUZWEEKLY-26JUL19-T100 (more than 100 Strait of Hormuz transit calls, Jul 13–19) at a 73¢ limit, MEDIUM conviction, $49.64 at risk (5.0% of capital). Fourteen diligenced candidates were rejected and logged for shadow-tracking. 95% of capital is held as cash — under v3 rules that is a result, not a failure: the historical record shows the losses came precisely from padding thin weeks with coin-flips, tails, and correlated legs.

1 · How this was researched

Mode: category-match. trading_events.category = 'Politics' matched 307 active markets across 114 events closing before 2026-08-27. No theme fallback needed.
Stage 1 mechanical screen (24h volume ≥ 1,500; bid-ask spread ≤ 5¢; not fully priced 95/5; not announcer-noise; not an already-live pick): 34 survivors. Six were excluded as already-published picks (KXTRUMPATTEND, KXKASHOUT, KXLAGODAYS-26JUL-0, KXKNESSET, KXMAXSHIPSHORMUZ-AL50, KXFISAEXTEND). Nine were cut as announcer-noise count markets (Truth Social post-count ladder ×6, Getty-photo-days ladder ×3). That left ~19 markets across 10 distinct theses for full diligence.
Stage 2/2.5 diligence: rules text pulled for every candidate; 14-day intraday history from market_snapshots; live Kalshi orderbook for finalists; primary-source news via web search. Per v3.1, every probability is a forecast of the resolver's verdict, with resolver risks priced as explicit point deductions.
Key data coup: the IMF PortWatch chokepoint feed (the resolver for all six Hormuz markets) is directly queryable via its public ArcGIS endpoint. Latest published Hormuz datapoint at audit time: Jul 5 — meaning both resolution windows currently trading are entirely unpublished, and everyone is trading on live AIS reconstruction.

2 · Markets reviewed

Market	Question (short)	YES bid/ask	Vol 24h	Disposition
KXHORMUZWEEKLY-26JUL19-T100	Hormuz transit calls Jul 13–19 > 100	28 / 30	6,587	PICK — BUY NO @ 73
KXHORMUZWEEKLY-26JUL19-T75	… > 75	51 / 56	2,430	Reject — coin-flip band
KXHORMUZWEEKLY-26JUL19-T50	… > 50	71 / 73	1,685	Reject — NO side is a tail
KXHORMUZWEEKLY-26JUL12-T125	Hormuz transit calls Jul 6–12 > 125	73 / 75	10,798	Reject — data asymmetry
KXHORMUZWEEKLY-26JUL12-T150	… > 150	19 / 23	20,523	Reject — no edge
KXHORMUZMAX-26JUL12-JUL07	Jul 7 was the max-transit day of that week	83 / 85	4,023	Reject — unverifiable specialist info
KXHORMUZNORM-26MAR17-B260815	Hormuz 7-day MA > 60 before Aug 15	5 / 6	16,121	Reject — tail, lottery unused
KXMAXSHIPSHORMUZ-26JUL31-AL60	Any July day ≥ 60 transit calls	5 / 6	4,378	Reject — negative edge on NO
KXCLARITYVOTE-26JUL-AUG08	Senate recorded vote on CLARITY Act before Aug 8	65 / 66	1,755	Reject — fairly priced
KXAPRPOTUS-26JUL17 (8-rung ladder)	Trump RCP approval average at 11am ET Jul 17	mode 29/30	~2,000/rung	Reject — drift market, tail rungs
KXHBUDGETRES-26JUN-26AUG01	House passes a budget resolution before Aug 1	8 / 10	4,595	Reject — both sides (see §5)
KXKASHANNOUNCEOUT-26APR-AUG01	Kash Patel announces departure before Aug 1	6 / 8	1,572	Reject — cluster duplicate of live pick
KXTRUMPWORLDCUP-26-DJT-1	Trump attends ≥ 1 World Cup match	91 / 92	11,162	Reject — cluster duplicate of live pick
KXTRUMPUFC-26AUG-DJT	Trump attends UFC 330 (Philadelphia, Aug 15)	12 / 14	2,168	Reject — tail + adverse informed flow
KXLAGODAYS-26JUL-1	Exactly 1 Mar-a-Lago trip in July	6 / 8	26,804	Reject — cluster duplicate of live pick
KXTRUTHSOCIAL-26JUL18 (×6), KXTRUMPPHOTO-26JUL19 (×3)	Post-count / photo-day ladders	—	—	Stage-1 skip — announcer noise

3 · The pick

Pick 1 — `KXHORMUZWEEKLY-26JUL19-T100` · BUY NO @ 0.73 · MEDIUM CONVICTION

"Will there be more than 100 transit calls through the Strait of Hormuz from Jul 13, 2026 to Jul 19, 2026?" — resolves off IMF PortWatch. Closes 2026-07-21 13:00 UTC.

Current price (NO): 72¢ (YES 28 bid / 30 ask)
My probability (NO): 77% vs market-implied ~72%
Entry band: 72¢ effective — favorite band (60–90¢)
Conviction: MEDIUM — strong evidence, one live way to lose (fast truce)
Cluster: hormuz-shipping-collapse

Mispricing thesis. The market needs an average of >14.3 AIS-visible transit calls per day this week. As of this weekend the observable rate is in the single digits and falling, and the crowd's residual 28% YES largely prices a truce-and-surge scenario that would have to arrive by roughly Wednesday to matter. I think that path is worth ~18%, not 28%.

Evidence.

PortWatch's own numbers (the resolver, queried directly): daily Hormuz transit calls fell from 42/36/34/25/34 on Jul 1–5 (last published data) vs a ~88/day pre-crisis norm. During the June closure trough the feed printed 8, 14, 15 per day (Jun 21–23).
The war re-escalated inside the resolution window: Iranian forces attacked four vessels in the past seven days including a Cyprus-flagged container ship, and the US launched a third round of strikes on Iran on Saturday Jul 11 (Bloomberg via Insurance Journal, Jul 13; Al Jazeera, Jul 7; CNBC, Jul 9).
Observable traffic has collapsed to near zero: the southern (Omani) corridor "ground to a complete halt" with the last passage Wednesday Jul 8; the northern Iran-designated route saw "a handful of crossings"; all six commodity carriers that transited on Sunday Jul 12 did so with transponders off, and dark crossings outnumbered observable passages for three straight days (Insurance Journal/Bloomberg, above).
Dark ships are invisible to the resolver: PortWatch counts AIS-broadcasting crossings only — straits.live states this explicitly ("PortWatch counts AIS-broadcasting crossings only… true flow may run higher than the figure above"). Even if real traffic persists via secret transits, the reported count stays suppressed. The resolver gap works in NO's favor here.
Arithmetic: three days at ~7/day are effectively already baked in (~21 by Jul 15); the remaining four days would then need to average >20/day — a level last seen before the Jul 6–7 attacks — for YES to win.

Resolver profile (Stage 2.5). Resolver = IMF PortWatch daily chokepoint feed (portid chokepoint6), AIS-based, published with a ~7–9 day lag; the market sums the seven daily "transit calls" values for Jul 13–19. Rules text: "If the number of transit calls through the Strait of Hormuz as reported by the IMF PortWatch is above 75 [/100] from Jul 13, 2026 to Jul 19, 2026…" — purely mechanical, no discretion. Priced risks: −3 pts that press "handful" language understates the true observable run-rate (if it's really 12–15/day the total lands 90–105, uncomfortably near the strike); −2 pts for PortWatch backfill/revision quirks when dark vessels re-broadcast. Evidence-based NO probability 82 − 5 = 77 final.

Tail risk (the cleanest way to lose). A US–Iran truce or a broadly insured Iranian "permission regime" lands by ~Jul 16, ships turn transponders back on, and the queued backlog releases. Precedent: after the June de-escalation, PortWatch printed 52 and 51 on Jun 24–25 — triple the closure trough, overnight. Four post-truce days at ~35–50/day plus the low early week clears 100 easily. Talks are genuinely ongoing (Al Jazeera), so this is real — it is why the pick is MEDIUM, not HIGH.

Numbers. 68 contracts × 73¢ = $49.64 at risk; max payout $68.00 (+$18.36, +37% on cost, in 8 days). EV at 77%: +4¢/contract = +$2.72 (+5.5%) before Kalshi fees (~1.4¢/contract, ~$0.94), net ≈ +$1.78. Recorded for calibration only — size was set by the MEDIUM-tier cap and orderbook depth, not by EV.

Liquidity / entry context. Live book at signal: YES 28 bid / 30 ask; buying NO fills 1 contract @ 72 and 67 @ 73 → ~68 contracts fillable at ≤ 73¢ (this, not the $70 tier cap, binds the size); next depth sits at 75/81 — do not chase. 24h volume 6,587; open interest 5,308.

Price history. Market listed Jul 11 and repriced violently on the weekend escalation: YES traded as high as ~80¢-ask on Jul 11, chopped 10–54 on Jul 12, and settled at 28/29 today on 6.6k volume. I am buying NO after the move — the thesis's first ~40¢ is already in the price; the claimed residual edge is only the truce-timing/backlog mechanics, which is why size is small.

4 · Recommended $1,000 portfolio

#	Market	Action	Limit	Contracts	Cost	Max payout	EV¢/ct	EV %	Tier / band
1	KXHORMUZWEEKLY-26JUL19-T100	BUY NO	73	68	$49.64	$68.00	+4.0	+5.5%	MEDIUM · favorite (60–90¢)
	Cash reserve				$950.36				95.0% of capital
	Total				$1,000.00	$68.00		+5.5% blended on deployed

EV figures are recorded for calibration and did not drive sizing (v3 rule — the resolved track record showed stated EV was anti-predictive). Size = min(MEDIUM-tier cap $70, fillable depth $49.64).

Cluster exposure (cap: 15% of capital = $150 per cluster)

Cluster	Cost	% of capital	Cap
hormuz-shipping-collapse	$49.64	5.0%	15%

Cross-run note: the live feed already holds two Hormuz-family picks from prior runs. KXHORMUZNORM-B260715 NO resolves Jul 15 in the same direction as this thesis; KXMAXSHIPSHORMUZ-AL50 YES is anti-correlated with this pick (it wins in exactly the truce-surge scenario where this pick loses), so at the feed level the marginal Hormuz exposure added here is partially hedged.

Conviction exposure

Tier	Cost deployed	Per-pick cap	Picks
HIGH	$0.00	$150	0
MEDIUM	$49.64	$70	1
LOW	$0.00	$30	0

Risk profile

Worst case: −$49.64 (−5.0% of capital) — a truce by midweek plus an AIS-on backlog surge pushes the week over 100.
Best case: +$18.36 (+1.8% of capital).
Most likely: the war remains hot or ambiguous through Jul 19, PortWatch prints ~40–80 for the week, NO pays. One thesis, one leg — no correlation risk inside this run's book.

Execution notes

Place a marketable limit for 68 NO at 73¢; do not lift the 75/81 depth. If unfilled, rest at 72–73 — this book refreshes on Middle East headlines.
Invalidation triggers (exit or don't enter): any announced US–Iran ceasefire or credible truce reporting before ~Jul 16; Lloyd's/insurers blessing Iran's "permission" corridor (mass AIS-on compliance would rebuild counts without a truce); live-tracker observable counts rebounding above ~20/day.
Watchlist: (1) KXHBUDGETRES YES at ≤10¢ becomes interesting the moment House Budget notices a resolution markup — the $87.6B Iran supplemental is a real forcing function; (2) KXCLARITYVOTE YES if Thune files cloture (jumps toward 95 instantly); (3) PortWatch publishes Jul 6–8 data any morning now — it arrives before KXHORMUZWEEKLY-26JUL12 settles and will calibrate the whole complex.
Kalshi trading fees (≈0.07·P·(1−P)) cost ~1.4¢/contract here — the pick's net edge is ~+2.6¢/contract after fees. Stated honestly: this is a small, defensible edge, sized accordingly.

5 · What I rejected and why

All 14 rejects below are machine-logged in picks.json and shadow-tracked to settlement — if the rejects outperform the picks, the screen adds nothing and we want to know.

Cut by the resolver/data screen

KXHORMUZWEEKLY-26JUL12-T125 (would-be YES @ 75) — the entire resolution week (Jul 6–12) is unpublished by PortWatch; the specialists on the other side watched the AIS feed live and my news-based reconstruction (~100–140 calls) straddles the 125 strike. Betting my reconstruction against their observation is the definition of a phantom edge. Same logic kills T150 (no side offers value at 19/23) and KXHORMUZMAX-26JUL12-JUL07 — 85¢ on a 1-of-7 "which day was the max" pick can only reflect data I don't have, and PortWatch's algorithm can diverge from live trackers on exactly the marginal days that decide ties.
KXMAXSHIPSHORMUZ-26JUL31-AL60 (would-be NO @ 95) — negative edge: my NO probability (~90%) is below the 95¢ ask, because a truce-driven queue release printed 51–52/day on Jun 24–25 and July has 18 days left.

Cut by the Stage-3.5 entry-band screen (the discipline section)

KXHORMUZWEEKLY-26JUL19-T75 (would-be NO @ 49) — coin-flip band (35–60¢). My 55% vs implied 51% is inside my own error bars; the band requires HIGH conviction plus a ≥15¢ edge and this has neither. Historically this band hit ~33% and bled — cut.
KXHORMUZWEEKLY-26JUL19-T50 (would-be NO @ 29) — sub-35¢ tail. The single-digit run rate makes ≤50 genuinely live (~38%), but a 9¢ tail on "handful/day" press language is a lottery ticket, and the one lottery slot stays empty this run.
KXHORMUZNORM-26MAR17-B260815 (would-be YES @ 6) — tail requiring a fast, durable peace plus full AIS-on normalization to a 60+ seven-day average within a month. ~10% true vs 6¢ ask isn't decisive enough to spend the lottery slot.
KXHBUDGETRES-26JUN-26AUG01 (would-be YES @ 10) — the most interesting reject: Budget Chair Arrington is publicly pushing a third budget-resolution markup before recess and the White House's $87.6B Iran-war supplemental needs the reconciliation vehicle (Punchbowl, Washington Examiner). I mark it ~15% vs 10¢ ask — but with ~8 House legislative days, no markup noticed, and open GOP infighting (NewsNation), the edge isn't decisive; tail band, no slot. Note the same finding also killed the lazy NO-at-92 trade this market superficially invited.
KXAPRPOTUS-26JUL17 approval ladder — every rung is a sub-35¢ tail in a poll-drop drift market (resolver: the RCP average at 11:00 ET Friday) where regulars model exactly which polls enter and exit the window. The rung asks sum to ~111¢ — retail overpays both tails — but no single side is buyable after fees. No modeling edge; cut whole.
KXTRUMPUFC-26AUG-DJT (would-be YES @ 14) — the base rate looked mispriced (Trump was cageside at UFC 327 Miami and hosted UFC Freedom 250 at the White House in June; UFC 330 is a Makhachev title card in Philadelphia on Aug 15). But the price collapsed 21¢→13¢ on 10–13k daily volume over the last 72 hours — someone traded that market hard on information I could not find. Buying a tail into unexplained informed flow is how tails went 0-for in the resolved record. Cut; watchlist for an explanation.

Cut by cluster discipline (cross-run correlation with live picks)

KXKASHANNOUNCEOUT-26APR-AUG01 (would-be NO @ 94) — the feed already carries KXKASHOUT NO. Two correlated Kash Patel legs is literally the v1 catastrophic-loss pattern this methodology exists to prevent. Auto-cut regardless of edge.
KXTRUMPWORLDCUP-26-DJT-1 (would-be YES @ 92) — I mark it 96% (semis Jul 14–15, bronze, and the final are all win paths; FIFA has confirmed Trump presents the trophy Jul 19 — Yahoo/FIFA, NBC New York). But it is ~0.97-correlated with the live pick KXTRUMPATTEND YES: auto-copy users would simply double their Trump-cancels exposure for ~3¢ of deep-favorite edge. Cut.
KXLAGODAYS-26JUL-1 (would-be NO @ 94) — same underlying thesis and resolver as the live KXLAGODAYS-26JUL-0 YES pick (Trump summers at Bedminster, zero Florida trips). Cut as a duplicate leg.

Cut as fairly priced

KXCLARITYVOTE-26JUL-AUG08 (would-be YES @ 66) — the rules are generous (any recorded vote counts, including a failed cloture), and industry pressure into the pre-recess window is real. But no cloture has been filed, the NDAA may consume the week of Jul 13, and three named disputes still block the seven-Democrat math (Yahoo Finance, crypto.news). My 55–65% straddles the 66¢ ask. One resolver caution worth flagging for anyone tempted: a Senate vote on the Senate's own market-structure companion might not count as a vote "on the CLARITY Act" — a definitional trap in both directions. No edge; pass.

6 · Sources

IMF PortWatch — resolver for all Hormuz markets; daily data pulled directly from the public ArcGIS feed (Daily_Chokepoints_Data, portid=chokepoint6), latest print Jul 5, 2026.
"Ships Transit Hormuz in Secret as US and Iran Trade Strikes" — Bloomberg via Insurance Journal, Jul 13, 2026.
straits.live — live Hormuz tracker; explicit note that PortWatch counts AIS-broadcasting crossings only.
Al Jazeera — Ships attacked in the Strait of Hormuz (Jul 7, 2026)
CNBC — Tanker traffic slows after Iranian attacks (Jul 9, 2026) · OilPrice — five-week low
Yahoo Finance — CLARITY Act stalls in Senate · CLARITY countdown · crypto.news · The Defiant
Punchbowl — Arrington wants third reconciliation bill by August recess · Washington Examiner · NewsNation · The Hill
NBC New York — Trump plans to attend World Cup final · Yahoo — FIFA trophy protocol
UFC.com — UFC 330 Philadelphia announcement · Irish Star — Trump at UFC 327 · Fox News — UFC Freedom 250 at the White House
RealClearPolling — Trump job approval (resolver for the approval ladder)
Kalshi live market data via api.elections.kalshi.com/trade-api/v2; historical prices via the read-only mirror (trading_markets, trading_events, market_snapshots).

Data: Kalshi public API and read-only DB mirror (queried 2026-07-13 ~16:00 UTC), IMF PortWatch ArcGIS feed, cited news sources. All probabilities are subjective estimates; prediction-market contracts can and do resolve to zero. This report is research, not financial advice. Methodology v3.1: conviction-weighted sizing, entry-band screens, 15% cluster cap, EV-agnostic sizing; rejects are machine-logged and shadow-tracked to settlement.