San Francisco's weather in May typically ranges from the mid-50s to low-70s, making a high of 66-67°F well within the realm of possibility. Yet traders have priced this outcome at just 1% YES, suggesting extreme confidence that the actual high will fall outside this narrow one-degree band. This implies the market expects either significantly warmer conditions (pushing into the upper 70s or low 80s) or cooler-than-typical weather (below 65°F). The extreme skepticism reflected in the 1% odds indicates strong conviction among weather traders that May 18's conditions will diverge notably from this specific range. San Francisco's unique microclimate—influenced by the Pacific Ocean and Bay geography—can produce rapid temperature swings, and the market's steep discount on this band suggests traders anticipate a more pronounced swing in one direction or another. The odds ultimately reflect sophisticated meteorological modeling and recent pattern recognition, making this market a barometer of professional forecaster consensus on whether May 18 will be a typical or exceptional May day in San Francisco.
What factors could move this market?
San Francisco enjoys a notably mild and stable climate throughout the year, a consequence of its proximity to the Pacific Ocean and the Bay's unique geography. In May, the city typically experiences highs in the 65-70°F range, with cooler mornings (often in the 50s) and moderate afternoons. The 66-67°F band sits squarely in this historical norm, making the market's 1% pricing particularly striking: traders are essentially betting that this statistically normal outcome will not occur.
For YES to resolve, May 18 must experience textbook normal May conditions in San Francisco—a balanced interplay of moderate offshore winds and typical marine layer influence that keeps temperatures in the sweet spot. Such ordinary conditions do occur regularly in May, but the 1% odds suggest traders believe external atmospheric forces will push May 18 away from this equilibrium. The market's extreme skepticism reflects confidence in larger-scale weather patterns that would drive conditions toward the extremes rather than the norm.
Warmer-than-normal conditions would result from a high-pressure system positioned over California, suppressing marine layer influence and allowing inland air masses to push coastal temperatures significantly upward into the 75-82°F range. Such systems are capable of generating unusual May heat. Conversely, cooler outcomes could stem from an enhanced marine layer surge driven by an upper-level trough or coastal eddy, keeping highs in the 55-62°F range. Both extremes are meteorologically plausible in May, and traders apparently assess both as more likely than the narrow middle band.
Historically, May temperature variance in San Francisco shows that days above 75°F occur infrequently (perhaps one or two in the month), and days below 60°F are similarly uncommon. The 66-67°F band represents the modal climate outcome—yet the 1% odds suggest traders believe May 18's extended forecast models indicate one of these less-common scenarios. This conviction likely reflects signals from the latest North Pacific jet stream positioning, potential early heat dome development, or anomalous marine layer patterns tracked in the extended forecast.
The 1% odds encode a precise statement: that May 18, 2026 will deviate from San Francisco's typical May pattern, pushing toward either uncommon warmth or unusual coolness, leaving the comfortable 66-67°F middle ground as the least likely outcome. It is fundamentally a bet on exceptionality rather than normality.
What are traders watching for?
Official National Weather Service high temperature for San Francisco on May 18 — the single data point that resolves the market
Extended weather forecast models from May 15-17 — crucial signal for whether May 18 breaks toward warmth or coolness
Marine layer positioning and intensity on May 18 — determines if coastal cool dominates or inland warmth prevails
High-pressure system tracks over California — would suppress marine influence and drive temperatures into the 75°F+ range
How does this market resolve?
Market resolves YES if San Francisco's official high temperature on May 18, 2026 (per National Weather Service) reaches 66-67°F inclusive; all other readings resolve NO.
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