NO-Side Overpriced Temperature Market Fade

How It Works The strategy ingests two real-time data sources — METAR aviation weather observations (ground truth, updated hourly) and Open-Meteo numerical weather forecasts — and fits a Gaussian probability distribution over the likely temperature range for a given market's resolution period. The model produces a calibrated probability estimate for whether a temperature threshold will be met.

Entry Conditions A trade is entered on the NO side when the Polymarket-implied YES probability materially exceeds the Gaussian model's estimated probability. The gap represents the mispricing the strategy exploits. No explicit threshold is documented in the repo description, but the paper-trading implementation suggests systematic scanning across multiple temperature markets to find the largest divergences.

Exit Conditions Positions are held to resolution (binary outcome markets). Given the short-duration nature of most Polymarket weather markets, time-to-resolution acts as the natural exit. Early exit at tighter spreads may also be viable if the market reprices toward the model estimate before resolution.

Verified Results The repository is described as a paper-trading bot (automated simulation, no real capital deployed as of the report date). No on-chain verified PnL is reported. The repo has 2 stars and 0 forks, suggesting limited external validation.

Risks Gaussian temperature models can underestimate tail risk during extreme weather events. METAR data covers airport locations specifically and may not match the geographic reference point used by the Polymarket market. Model miscalibration, especially for intraday markets, could produce false signals. Execution slippage in low-liquidity weather markets could erode the edge.