Israel military action against Yemen by September 30?

The market resolves Yes if Israel conducts a military strike on Yemeni territory before September 30, 2025. The current price of 1% implies an almost negligible probability. Yet Israel has already struck Yemeni ports and Houthi targets in 2024–2025, while the Houthis continue launching missiles and drones at Israeli territory. That makes another strike a realistic scenario within the coming months.

Key drivers behind our 12% estimate: persistent Houthi activity in the Red Sea and their stated support for Palestinians; Israel's willingness to conduct long-range preventive operations; and the logistical capability for air and naval strikes. The historical frequency of Israeli operations against Yemen over the past year raises the base rate. The market appears to underprice this risk, likely due to a short-term lull or lack of dramatic headlines.

For Yes to win, only one confirmed strike—aerial, missile, or drone—on Yemeni soil before September 30 is needed. This could occur as retaliation for another Houthi attack or as part of a broader campaign against Iranian proxies. At a 1% price, even a modest probability offers an asymmetric payout.

Main risks: de-escalation, a Gaza ceasefire, reduced Houthi activity, or Israel shifting focus to other fronts. A strike could also be classified as an operation against a specific group rather than a 'military action against Yemen,' creating resolution ambiguity. If no incident occurs during the period, the idea goes to zero.