# Kalshi Politics — Mispricing Audit — 2026-07-13

Date: 2026-07-13
Source: https://kalshi-audits.pages.dev/2026-07-13-kalshi-politics-mispricing-audit

---
# 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published Hormuz datapoint at audit time: **Jul 5** — meaning both resolution windows currently trading are entirely unpublished, and everyone is trading on live AIS reconstruction.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 band72¢ effective — favorite band (60–90¢)
ConvictionMEDIUM — strong evidence, one live way to lose (fast truce)
Clusterhormuz-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](https://www.insurancejournal.com/news/international/2026/07/13/877286.htm); [Al Jazeera, Jul 7](https://www.aljazeera.com/news/2026/7/7/ships-attacked-in-the-strait-of-hormuz-what-that-means-for-ongoing-talks); [CNBC, Jul 9](https://www.cnbc.com/2026/07/09/iran-strait-hormuz-oil-tanker-traffic-gulf-trump.html)).
- **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](https://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](https://punchbowl.news/article/house/arrington-fod-recap/), [Washington Examiner](https://www.washingtonexaminer.com/news/4622254/clock-ticks-house-tries-push-third-party-line-budget-bill/)). I mark it ~15% vs 10¢ ask — but with ~8 House legislative days, no markup noticed, and open GOP infighting ([NewsNation](https://www.newsnationnow.com/politics/gop-lawmakers-battle-as-conservatives-press-for-third-budget-reconciliation-bill/)), 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](https://sports.yahoo.com/articles/fifa-break-protocol-allowing-donald-094000674.html), [NBC New York](https://www.nbcnewyork.com/world-cup/trump-world-cup-final-fifa-metlife-stadium/6512369/)). 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](https://finance.yahoo.com/markets/crypto/articles/clarity-act-stalls-senate-three-100403007.html), [crypto.news](https://crypto.news/senate-recess-puts-clarity-acts-july-vote-at-risk/)). 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](https://portwatch.imf.org/) — 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"](https://www.insurancejournal.com/news/international/2026/07/13/877286.htm) — Bloomberg via Insurance Journal, Jul 13, 2026.
- [straits.live](https://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)](https://www.aljazeera.com/news/2026/7/7/ships-attacked-in-the-strait-of-hormuz-what-that-means-for-ongoing-talks)
- [CNBC — Tanker traffic slows after Iranian attacks (Jul 9, 2026)](https://www.cnbc.com/2026/07/09/iran-strait-hormuz-oil-tanker-traffic-gulf-trump.html) · [OilPrice — five-week low](https://oilprice.com/Latest-Energy-News/World-News/Strait-of-Hormuz-Tanker-Traffic-Falls-to-Five-Week-Low.html)
- [Yahoo Finance — CLARITY Act stalls in Senate](https://finance.yahoo.com/markets/crypto/articles/clarity-act-stalls-senate-three-100403007.html) · [CLARITY countdown](https://finance.yahoo.com/markets/crypto/articles/clarity-act-countdown-crypto-bill-161215444.html) · [crypto.news](https://crypto.news/senate-recess-puts-clarity-acts-july-vote-at-risk/) · [The Defiant](https://thedefiant.io/news/regulation/clarity-act-senate-floor-seven-democrat-math-house-fast-follow)
- [Punchbowl — Arrington wants third reconciliation bill by August recess](https://punchbowl.news/article/house/arrington-fod-recap/) · [Washington Examiner](https://www.washingtonexaminer.com/news/4622254/clock-ticks-house-tries-push-third-party-line-budget-bill/) · [NewsNation](https://www.newsnationnow.com/politics/gop-lawmakers-battle-as-conservatives-press-for-third-budget-reconciliation-bill/) · [The Hill](https://thehill.com/homenews/house/5952326-house-gop-to-do-fisa-ndaa/)
- [NBC New York — Trump plans to attend World Cup final](https://www.nbcnewyork.com/world-cup/trump-world-cup-final-fifa-metlife-stadium/6512369/) · [Yahoo — FIFA trophy protocol](https://sports.yahoo.com/articles/fifa-break-protocol-allowing-donald-094000674.html)
- [UFC.com — UFC 330 Philadelphia announcement](https://www.ufc.com/news/octagon-returns-philadelphia-ufc-330-august-15-xfinity-mobile-arena) · [Irish Star — Trump at UFC 327](https://www.irishstar.com/sport/other-sports/ufc-327-attendance-donald-trump-37012713) · [Fox News — UFC Freedom 250 at the White House](https://www.foxnews.com/entertainment/trump-dana-whites-star-studded-white-house-ufc-event-draws-big-names-while-several-invited-a-listers-skip)
- [RealClearPolling — Trump job approval](https://www.realclearpolling.com/polls/approval/donald-trump/approval-rating) (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.