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The Setup
As of writing tomorrow's high temperature market for Los Angeles (LAX Airport) has the 73-74F bracket trading at just 9 cents. Meanwhile, the National Weather Service forecast for the exact settlement location is... 73F.
That's a bracket priced at 9% implied probability when the point forecast lands squarely in it.
The Methodology
Kalshi settles LA temperature markets using the official NWS Climatological Report (CLI) for LAX Airport (KLAX). The coordinates matter - they use 33.93806N, 118.38889W (from the official station XML).
When you query the NWS API forecast for those exact coordinates, you get gridpoint LOX/149,41. The forecast for Friday December 12th:
Period | Temperature |
|---|---|
Friday | 73F |
Friday Night | 54F |
The market appears to be pricing in something closer to 69-70F. Either the market knows something the NWS doesn't, or there's opportunity here.
The Brackets
Bracket | Bid | Ask | Implied % | NWS Forecast |
|---|---|---|---|---|
67-68F | 26c | 27c | 26.5% | 5-6F below |
69-70F | 30c | 31c | 30.5% | 3-4F below |
71-72F | 16c | 18c | 17% | 1-2F below |
73-74F | 4c | 9c | 6.5% | FORECAST BRACKET |
>74F | 9c | 10c | 9.5% | 1F above |
The Trade
YES on 73-74F at 9c
If the forecast is right, this pays 100c for a 9c cost - that's 11:1 odds on what should be roughly the modal outcome.
Even accounting for NWS forecast uncertainty (historical RMSE of ~2.5-3F for LA), the 73-74F bracket should be priced closer to 25-35%, not 9%.
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Risks
Let's be honest about what could go wrong:
Forecast updates - NWS could revise down to 70-71F tonight. Check forecast before market close.
Marine layer - LA coastal temps can be suppressed by fog. The forecast already accounts for "patchy fog" but could be heavier than expected.
Settlement timing - The high is recorded over a 24-hour period. If it peaks early and cools fast, might land 1-2F below forecast.
We're wrong - The market has a lot of volume. Maybe they're pricing in something we don't see.
Bottom Line
The NWS says 73F. The 73-74F bracket is at 9c. Either the forecast is badly wrong, or there's ~20c of edge here.
I like the asymmetry: risk 9c to win 91c on what looks like a fairly confident forecast.
Last Week’s Positions
Here's how our recent calls played out:
Powell Press Conference (Dec 10, 2025)
Market | Side | Entry | Result | P&L |
|---|---|---|---|---|
Unchanged | Yes | 29c | Won | +240% |
Beige Book | No | 37c | Won | +170% |
Pandemic | Yes | 61c | Won | +65% |
QE | No | 78c | Won | +28% |
AI | No | 23c | Lost | -100% |
Tariff Inflation | No | 55c | Lost | -100% |
Trump | Yes | 12c | Lost | -100% |
Result: +29% ROI (4 wins, 3 losses)
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Nothing here is trading advice — just data, probabilities, and our best read of the markets. Event-market trading involves risk and you should make your own decisions. We may hold positions in the markets we discuss and receive compensation through affiliate links.