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Outcomes
Market
Price
AI Fair
Value
Value
Edge
YesNo
AI Insights:
03.17 22:20 UpdatedFair Value Reasoning:
Based on authoritative scientific consensus from the USGS, no faults exist on Earth long enough to generate a magnitude 10.0 or higher earthquake (physically, this would require a rupture extending around most of the planet's circumference). The largest recorded earthquake in history was magnitude 9.5 in Chile (1960). Therefore, the physical probability of this event is effectively 0%. The current price of ~5.6 cents for 'Yes' does not represent actual probability but reflects irrational longshot bias and the liquidity premium for capital lock-up.
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Arbitrage|Low Risk
Arbitrage Plan:
Buy Option_'No'
Plan Description:
Since the scientific probability of the event is 0, buying 'No' is essentially a low-risk yield opportunity exploiting market inefficient pricing. While not a mathematical risk-free arbitrage, it is a 'scientific arbitrage' based on physical laws. The current price of 94.45c implies an absolute return of ~5.88%. Combined with the remaining 288 days, the annualized yield is approximately 7.44%. This exceeds many traditional fixed-income products and carries virtually no risk, barring extreme black swans (e.g., asteroid impact causing geological upheaval, though typically not classified as a standard earthquake).Sign up to view more information
Arbitrage: 5¢
|Annualized yield: 7.44%
Hedging
Crude Oil
US 10Y Yield
Gold
S&P 500
If a magnitude 10.0 earthquake were to occur, it would be an unprecedented global catastrophe (the highest recorded is only 9.5), releasing energy far beyond typical major quakes. This would trigger massive tsunamis and geological destruction, likely devastating the global economy, supply chains, and insurance sectors. Thus, it represents an extreme 'Black Swan' shock for all major risk assets (like the S&P 500) while significantly boosting safe havens like Gold.
Divergence
There is a significant divergence between market pricing (~5.6% probability) and mainstream scientific consensus (0% probability). This divergence is not due to information asymmetry but rather the structural characteristics of prediction markets: even for impossible events, prices rarely drop to absolute zero due to capital opportunity costs, systemic risk hedging needs, and the gambling psychology of some speculators. The market price reflects a 'floor price' rather than actual probability.
