The strongest current value remains in Chicago 86–87°F and Seattle 82–83°F. The important portfolio correction is to reduce the oversized July Fed-hike position: its earlier estimated edge is no longer defensible at the current information set.
This is a paper portfolio; no live orders were placed.
Recommended changes
| Contract | Market price | Fair probability | Edge | Action |
|---|---|---|---|---|
| Chicago, July 20: 86–87°F YES | 0.285 | 47% | +18.5 pp | Add 10 USDT, limit ≤0.29 |
| Seattle, July 20: 82–83°F YES | 0.30 ask | 45% | +15 pp | Add 10 USDT, limit ≤0.30 |
| Fed raises 25 bps in July — YES | 0.049 | 5–7% | small/uncertain | Sell 75%, retain 10 USDT |
| Dallas, July 19: 98–99°F YES | 0.565 | 63–66% | +6.5–9.5 pp | Hold 50 USDT |
| NYC, July 20: 82–83°F YES | 0.36 ask | 44% | +8 pp | Hold 25 USDT |
| San Francisco: 70–71°F YES | 0.36 ask | 43% | +7 pp | Hold 15 USDT |
| San Francisco: 72–73°F YES | 0.27 ask | ≈27% | none | Hold; do not add |
| WTI touches $90 in July — YES | 0.524 ask | 56% | +3.6 pp | Hold 75 USDT |
| No new US–Iran talks by August 31 | ≈0.56 | 64% | ≈+8 pp | Hold 80 USDT |
1. Chicago 86–87°F — best opportunity
Chicago’s 86–87°F outcome is priced at 28.5¢, while the hourly airport forecast reaches 86°F, and the NWS point forecast for O’Hare calls for a high near 87°F. The competing 84–85°F range costs 31.5¢ despite sitting below the latest central forecast.
forecastturn903734forecast1
Incremental order:
- stake: 10 USDT;
- maximum price: 0.29;
- shares at 0.285: approximately 35.1;
- profit if successful: approximately 25.1 USDT;
- model EV at 47%: approximately +6.5 USDT;
- expected return on added stake: approximately +65%.
After execution, total Chicago cost becomes 50 USDT. Do not increase beyond that because a one-degree forecast error can move the result into either neighbouring range.
2. Seattle 82–83°F — second-best entry
Seattle’s 82–83°F contract has a 30¢ ask, while the airport forecast peaks at 83°F. The market currently favors 84–85°F at 35%, even though the latest hourly maximum is one range lower.
Add 10 USDT at 0.30 or less:
- approximately 33.3 additional shares;
- profit if successful: approximately 23.3 USDT;
- model EV at 45%: +5 USDT;
- total Seattle cost after execution: 25 USDT.
Liquidity for this outcome is only about $623, so a passive limit order is essential.
3. Reduce the Fed position from 40 to 10 USDT
The July 25-basis-point increase currently trades at 4.9%, with no change at 94.4%. The Fed held the 3.50%–3.75% range in June, and the decision and associated reserve-rate actions were unanimous. Recent inflation reporting supports holding in July, although energy-price risks leave a small hike tail.
The previous 9–11% fair estimate placed too much weight on an external futures comparison that is not reliably supported in the current scan.
Action: sell approximately 75% of the position—roughly 600 shares if the portfolio holds about 800—at 0.049 or better. Retain a 10-USDT tail position. This removes a disproportionate source of portfolio EV that depended on a very low-probability event.
Existing positions
Dallas 98–99°F: Dallas Love Field is currently around 95°F, with the forecast maximum at 98°F and the official outlook around 98–99°F. The contract costs 56.5¢. Hold the remaining 50-USDT position, but do not add this late in the event; station-level readings can still reach 100°F.
NYC 82–83°F: LaGuardia’s forecast peaks at 82°F, while the range costs 36¢. The edge remains positive, but the outcome has only about $382 in volume, so the current 25-USDT exposure is enough.
San Francisco: the airport forecast peaks at 71°F. That supports the held 70–71°F position, priced at 36¢. The adjacent 72–73°F contract at 27¢ is approximately fairly priced and provides some protection against a one-degree overshoot, but it should not be increased.
WTI $90: the contract costs 52.4¢. WTI closed Friday, July 17, at $82.49 after gaining roughly 16% for the week, while escalating U.S.–Iran hostilities and reduced regional oil flows preserve the possibility of a short-lived move to $90. Hold, but do not add because the edge is modest and correlated with the Iran position.
No new U.S.–Iran talks by August 31: the corresponding YES outcome is approximately 44%, implying NO near 56%. The contract requires a formal, senior-level, in-person diplomatic round. Renewed military strikes materially reduce near-term odds, but Pakistan or Qatar could still arrange a qualifying meeting. Fair NO is approximately 64%; hold 80 USDT without increasing.
Updated model portfolio
Assuming Chicago and Seattle execute at their limits and 75% of the Fed position is sold:
| Open position | Cost basis |
|---|---|
| Dallas 98–99°F | 50 USDT |
| Chicago 86–87°F | 50 USDT |
| Seattle 82–83°F | 25 USDT |
| NYC 82–83°F | 25 USDT |
| San Francisco 70–71°F | 15 USDT |
| San Francisco 72–73°F | 20 USDT |
| WTI touches $90 | 75 USDT |
| No U.S.–Iran talks by August 31 | 80 USDT |
| Fed +25 bps | 10 USDT |
| Total open cost | 350 USDT |
| Portfolio metric | Estimate |
|---|---|
| Starting capital | 1,000 USDT |
| Free reserve | approximately 639–642 USDT |
| Cumulative realized P/L | approximately −8 to −11 USDT |
| Current liquidation value | approximately 1,001–1,006 USDT |
| Raw model expected terminal value | approximately 1,088–1,094 USDT |
| Raw expected return | approximately +8.8% to +9.4% |
| Expected value after a 60% haircut to model edge | approximately 1,036–1,043 USDT |
| Conservative expected return | approximately +3.6% to +4.3% |
Key risks
The portfolio remains highly sensitive to exact airport-station temperatures, where a one-degree miss can erase an otherwise correct forecast. Weather-market spreads and limited depth may prevent execution at displayed prices. WTI and Iran NO are positively correlated and could both fall sharply after credible diplomatic news. The revised Fed allocation acknowledges model-calibration risk rather than continuing to rely on a stale probability estimate.
Net action: add 10 USDT each to Chicago and Seattle, reduce the Fed position to 10 USDT, and leave all other positions unchanged.
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