Traders are making bets on different scenarios around President Trump’s future, including resignation, removal, or even death. Prediction markets like Kalshi and Polymarket now offer contracts on whether Trump will stay in office until the end of this year. Last weekend, Kalshi and Polymarket started offering event contracts, suggesting there’s only a 6% to 10% chance that Trump will leave office before 2026. This indicates that most traders believe his departure this year is unlikely. These bets increased after rumors spread on X regarding Trump’s health, particularly his lack of public appearances and a photo showing a bruise on his hand. The White House attributed the bruise to a circulatory issue, while Trump stated he has “never felt better” and showed up at his golf course. Despite these reassurances, trading volume remains high. Polymarket recorded over $500,000 in trades, and Kalshi saw similar activity. Speculation about the president’s health has created a small but active market for these event contracts. Even though the odds of Trump leaving before 2026 are low, with estimates between 6% and 10%, the significant trading volume suggests there is notable concern. This kind of speculation, even if based on rumors, can indicate broader market anxiety. For derivative traders, this presents an opportunity to buy inexpensive protection against sudden market volatility. A past example from early October 2020 shows that the VIX jumped over 15% in pre-market trading following Trump’s COVID-19 diagnosis. Currently, with the VIX at a calm level of 16, buying out-of-the-money VIX calls expiring in October or November could serve as a cost-effective hedge against a similar shock. This low-probability, high-impact risk can also be hedged with options on major indices like the S&P 500. The market is currently reacting to a slightly weaker-than-expected jobs report for August 2025, which showed job growth slowing to 155,000. Thus, it may be more sensitive to political events. Buying SPX put spreads allows traders to prepare for a potential downturn without a fully bearish stance. Certain sectors will react more strongly to this political uncertainty. Traders should examine the implied volatility in sectors like healthcare, defense, and regulated industries, which have done well under the current administration’s policies. If the implied volatility on ETFs for these sectors is low, it could be a good time to buy puts or sell call spreads as a relative value trade against the broader market. Overall, the contracts on Polymarket and Kalshi signal potential tail risks rather than being the trade itself. The strategy in the upcoming weeks should focus on minimizing risks rather than heavily betting on specific outcomes. Small, tactical positions in volatility or index puts can offer significant protection if this low-probability event occurs unexpectedly.

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