All
Outcomes
Market
Price
AI Fair
Value
Value
Edge
8+
YesNo
4
YesNo
3
YesNo
5
YesNo
7
YesNo
6
YesNo
AI Insights:
03.17 20:07 UpdatedFair Value Reasoning:
With 3 confirmed 7.0+ earthquakes and 104 days remaining, the USGS long-term average of 15 events/year (approx. 1 every 24 days) implies a mathematical expectation of ~4.3 new events. Poisson distribution models indicate that a final total of '8+' remains the most probable outcome (~39-40%), followed by 6 and 7. Although the recent lull in activity has shifted market sentiment toward lower-frequency options (like 5 and 6), statistically, major earthquakes are random, and a quiet period does not imply a lower future rate. Consequently, the '8+' option (35c) is undervalued relative to its fair value (39c), while middle options (like 5) are trading slightly above fair value (15c).
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Arbitrage|Direct Arb
Arbitrage Plan:
Buy Yes on all options (3, 4, 5, 6, 7, and 8+)
Plan Description:
The sum of the 'Yes' prices for all options currently totals 97.1c (1.2+6.4+15+18.5+21+35), which is below the 100c payout. Since the confirmed count is already 3, and the market options cover all mutually exclusive and exhaustive outcomes from 3 to 8+ (a Closed Set), buying the entire basket locks in a risk-free profit of approximately 2.9c.Sign up to view more information
Arbitrage: 2¢
|Annualized yield: 10.6%
Exotics
Although earthquakes are natural phenomena, betting on their frequency is uncommon. Most people lack intuitive knowledge of the baseline frequency of global 7.0+ earthquakes, making this a niche scientific statistical topic rather than a mainstream public interest event.
Divergence
The market is exhibiting 'Recency Bias.' Because there have been no recent earthquakes above magnitude 7.0, traders intuitively assume this 'quiet' trend will persist, depressing the price of the high-frequency option (8+). However, mainstream science (USGS) treats earthquakes as a Poisson Process, where timing is random and past silence does not influence future probability. Thus, market pricing implies a frequency rate lower than the scientific long-term average.
