After completing full PADP protocol on the Russia-Ukraine ceasefire market, we estimate 13% probability of formal ceasefire by December 31, 2025 (80% CI: 7-23%). Market prices this at 16%, creating 3.6% expected value on NO contracts. We are passing because EV falls below our 5% threshold and market price sits within our confidence interval, indicating insufficient edge given high uncertainty.
Russia-Ukraine Ceasefire 2025: Why We're Passing on 3.6% Edge
Market: Russia x Ukraine ceasefire in 2025? Analysis Date: November 26, 2025 Decision: PASS (no trade) Analyst: Main Agent
Executive Summary
After completing full PADP protocol on the Russia-Ukraine ceasefire market, we estimate 13% probability of formal ceasefire by December 31, 2025 (80% CI: 7-23%). Market prices this at 16%, creating 3.6% expected value on NO contracts. We are passing because EV falls below our 5% threshold and market price sits within our confidence interval, indicating insufficient edge given high uncertainty.
The core thesis: Putin has not committed to the negotiating framework with 35 days remaining, Russia retains military advantage and continues territorial gains, and all seven previous ceasefire attempts in this conflict failed. While diplomatic intensity is unprecedented, the critical causal bottleneck (Putin's willingness to agree) shows no evidence of resolution within the timeline.
Resolution Criteria
Market resolves YES if Russia and Ukraine establish a publicly announced, mutually agreed, formal ceasefire agreement by December 31, 2025, 11:59 PM ET. Resolution requires official announcements from both governments or credible media consensus. Informal agreements and humanitarian pauses do not qualify. The agreement must be reached by the deadline but need not take effect yet.
Base Rates and Historical Context
We documented 17 interstate war ceasefires to establish reference class probabilities. Excluding surrenders, 36% of negotiated ceasefires occurred within 35 days of serious negotiations (4 of 11 cases). Within 90 days: 73%. Within 180 days: 82%.
Cases that achieved ceasefire within 35 days shared specific triggers: military defeat imminent, war objectives achieved, or both sides exhausted combined with overwhelming external pressure. Russia-Ukraine matches none of these criteria as of November 26, 2025.
Russia-Ukraine specific history shows 0% success rate across seven to eight previous ceasefire attempts since 2022. The Minsk agreements (2014-2015) demonstrate Russia's pattern of systematic violations, with over 860 documented violations per day in 2018. Russia rejected Trump's 30-day ceasefire ultimatum in March 2025. Istanbul talks in May 2025 resolved only prisoner exchanges.
The current diplomatic effort differs in scale: Geneva and Abu Dhabi talks run in parallel, Trump is personally invested, and Ukraine agreed to a revised framework. This represents the most intensive ceasefire effort since the war began on February 24, 2022. The war is now on day 1,370.
Current Military and Economic Situation
Russia controls 115,515 square kilometers of Ukrainian territory (19% of Ukraine) and advances at approximately 169 square miles per month in 2025. Military momentum favors Russia. Casualty estimates reach approximately 2,000 per day across both sides, with Russia facing recruitment difficulties despite numerical advantages.
Russia's economy shows stress indicators: 21% interest rates, persistent inflation, and labor shortages in civilian sectors. War production locked the economy into military focus. These pressures are real but not acute enough to force Putin's hand, particularly given continued territorial gains.
Ukraine faces a more severe crisis: manpower exhaustion, declining Western aid, and domestic war fatigue. Zelensky demonstrates unprecedented flexibility in negotiations, driven by desperation. Ukrainian law (Constitution Article 17) prohibits territorial concessions without referendum, creating legal constraints on any agreement involving recognition of annexed territories.
Trump administration officials report progress in Geneva talks as of November 24, 2025. Ukraine agreed to revised US framework. Russia stated the plan could "serve as basis" but raised concerns about giving Ukraine time to regroup. Putin has not committed to the framework with 35 days remaining until deadline.
Causal Decomposition
We decomposed the question into sequential conditional probabilities:
Step 1: Russia commits to negotiating framework (20% probability). This is the critical bottleneck. Ukraine already agreed. Trump is pushing. The framework exists. But Putin shows no sign of commitment. Russia continues territorial advances and maintains that time favors their position. Without Russian commitment, the entire causal chain fails.
Step 2: Territorial status compromise (50% conditional probability given Step 1). The gap: Russia demands legal recognition of annexed territories (Donetsk, Luhansk, Zaporizhzhia, Kherson, Crimea); Ukraine refuses. Possible compromise involves frozen conflict without formal recognition, following precedents from Korea, Cyprus, and Transnistria. Both sides rejected this framework in previous negotiations, but current pressure might shift positions if Russia commits.
Step 3: Security guarantees agreement (65% conditional probability given Steps 1-2). The gap: Ukraine wants NATO membership path; Russia demands permanent NATO exclusion. Alternative frameworks include Article 5-style bilateral security guarantees from US or European security arrangements outside NATO structure. Russia objects to any Western security architecture. If Russia committed to ceasefire, this becomes negotiable but remains contentious.
Step 4: Timeline sufficiency (75% conditional probability given Steps 1-3). Even with political will, 35 days is tight for drafting formal agreements, translation, internal approvals, and public announcement. Historical rapid ceasefires (Russia-Georgia: 2 days, Yom Kippur: 3 days, WWI Armistice: 3 days) show fast execution is possible but all cases had political will established before final countdown. Russia not committed yet makes timeline constraint binding.
Chain probability: 0.20 × 0.50 × 0.65 × 0.75 = 4.9%
Incentive Structure
Putin's Calculation
Incentives favoring continuation outweigh ceasefire incentives. Russia gains territory monthly at minimal marginal cost. The domestic narrative presented annexed territories as permanent parts of Russia, making reversal politically costly. Putin can wait out Trump's presidency if needed, betting that time weakens Ukraine faster than Russia. Trust in Western commitments is absent after perceived NATO expansion violations and sanctions maintenance.
Economic pressure (21% rates, inflation, casualties) creates discomfort but not crisis. Russia's war economy functions. Oil revenues continue despite sanctions. The siloviki (security services, military leadership) benefit from war budgets and expanded power, creating institutional resistance to ceasefire.
Incentives favoring ceasefire are weaker: presenting frozen conflict as "victory" to domestic audience, reducing casualty toll and recruitment pressure, improving relations with Trump administration, and alleviating economic strain. These factors are real but insufficient to override battlefield momentum.
Zelensky's Position
Ukraine desperately wants ceasefire: manpower crisis acute, Western aid declining, domestic mobilization deeply unpopular, economic collapse looming without reconstruction funding. Zelensky shows unprecedented flexibility under pressure.
But constraints remain: domestic backlash if perceived as surrender, legal prohibition on territorial concessions without referendum, fear of permanent Korea-scenario division, and political survival risk if seen as weak. European allies are divided, with some opposing any territorial concessions.
Zelensky can accept ceasefire but faces severe limits on what terms are politically survivable domestically.
Trump's Leverage
Trump wants the deal badly: legacy as peacemaker, campaign promise to end war quickly, political win needed for foreign policy credentials, and December 31 provides clean year-end marker. He has strong leverage over Ukraine through aid dependence. He has limited leverage over Russia. Trump can pressure Zelensky to accept unfavorable terms but cannot force Putin to agree.
Why 13% Probability
Starting Point: General base rate of 36% for interstate war ceasefire within 35 days, adjusted downward to 20% prior given Russia-Ukraine specific 0% success rate and ongoing Russian military advantage.
Negative Adjustments:
Russia's military advantage and continued territorial gains (adjustment factor: ×0.70). Why accept ceasefire when winning?
Russia not committed with 35 days remaining (×0.60). All historical rapid ceasefires had political will established before countdown began. This is the strongest negative factor.
0% success rate on previous attempts in this conflict (×0.50). Pattern shows Russia uses talks as diplomatic cover while advancing militarily.
Putin's incentive structure favors continuation (×0.80). No acute crisis forcing decision.
Positive Adjustments:
Trump's personal investment and leverage over Ukraine (×1.30). This is genuinely new compared to previous attempts.
Ukraine desperate and willing (×1.20). Removes one major obstacle entirely.
Most intensive diplomatic effort in war's history (×1.40). Geneva and Abu Dhabi talks active simultaneously, framework refined, both sides at table.
Economic pressure on Russia, while not decisive (×1.10). Real costs mounting.
Calculation: 20% × (0.70 × 0.60 × 0.50 × 0.80) × (1.30 × 1.20 × 1.40 × 1.10) = 20% × 0.168 × 2.391 = 8.0%
Stress Testing Revision: Initial estimate of 8% was conservative. Stress testing revealed three areas of potential under-estimation:
Information asymmetry is significant. Market trades at 16.5% with $3.6 million in 24-hour volume, suggesting sophisticated participants with potentially better information about back-channel diplomacy. We cannot observe Trump-Putin communications or internal Kremlin discussions.
Over-anchoring on "not committed yet" status. Putin never telegraphs moves publicly for operational security reasons. Absence of public commitment does not equal absence of private willingness. 35 days provides sufficient time for decision and execution if political will emerges.
Unprecedented diplomatic intensity deserves weight. This attempt differs categorically from previous seven failures in scale, Trump involvement, framework refinement, and simultaneous engagement.
Adjusted upward to 13% to account for these factors while maintaining analytical conviction that Putin bottleneck remains unresolved.
Confidence Interval: [7%, 23%] with 80% confidence. Width of 16 percentage points reflects significant uncertainty from information gaps, geopolitical unpredictability, and black swan potential (sudden economic crisis, military disaster, Putin health issues, unexpected Trump leverage).
Why We're Passing
Expected Value: NO contracts trade at 84 cents. With P_final of 13%, betting $84 on NO yields expected value of (0.87 × $16) - (0.13 × $84) = $3.00 profit, equal to 3.6% return.
Below Threshold: Our protocol requires EV above 5% for worthwhile trades. At 3.6%, this fails the significance test.
Low Conviction: Market price of 16% falls within our confidence interval [7%, 23%]. We cannot be confident the market is wrong. The market may have information we lack about back-channel progress or Trump's actual leverage with Russia.
Kelly Sizing: Full Kelly would suggest 18.75% of bankroll, but our Kelly/5 divisor (applied due to 16pp CI width and mixed data quality) reduces position to 3.75% of $875 bankroll = $33. While this is conservative sizing, the fundamental issue is insufficient edge, not position size.
Information Asymmetry: $3.6 million in volume indicates active, informed trading. Sophisticated participants may know details about secret diplomacy we cannot observe. Betting against this level of market participation requires higher conviction than we have.
Opportunity Cost: With $875 available bankroll and three existing positions ($125 at risk), we preserve capital for higher-conviction opportunities. This analysis provided learning value on geopolitical forecasting without requiring capital commitment.
What Would Change Our Decision
Putin Commitment: If Russia formally commits to framework in next 7-10 days, we would update P_final from 13% to 25-30%. This would flip edge to YES side.
Public Rejection: If Putin explicitly rejects framework or withdraws from negotiations, we would update to 3-5% probability, creating large edge on NO worth betting.
Evidence of Secret Leverage: If Trump reveals substantial concessions offered to Russia (sanctions relief package, geopolitical deals), we would update upward to 20-25% range, potentially creating value on YES.
Economic Crisis in Russia: Sudden acute economic collapse or major military disaster would shift Putin's incentives dramatically, updating probability to 30%+ range.
EV Threshold: If market moves to 18 cents for YES (84% for NO becomes 82% for NO), our 13% estimate would generate 5%+ EV, crossing our significance threshold at current probability assessment.
Key Takeaways
The Russia-Ukraine ceasefire market demonstrates how rigorous analysis can identify structural bottlenecks (Putin's unwillingness to commit) while acknowledging information gaps (back-channel diplomacy) that limit confidence. The 0% historical success rate combined with Russia's military advantage and 35-day timeline constraint support low probability, but unprecedented diplomatic intensity and Trump's personal involvement create non-negligible upside scenarios.
Our 13% estimate sits 3.5 percentage points below market, suggesting potential edge. But with 16 percentage point confidence interval spanning market price, we lack conviction that market participants are wrong. In geopolitical forecasting with significant information asymmetry, appropriate humility about hidden information matters more than analytical sophistication.
The pass decision reflects disciplined application of EV thresholds. Small edges (3.6%) in high-uncertainty domains (geopolitical negotiations) do not justify capital allocation when opportunity cost exists. We complete analysis, document reasoning, and preserve capital for clearer opportunities.
This market resolves January 1, 2026. We will observe the outcome to calibrate future geopolitical forecasting and assess whether our 13% estimate or market's 16.5% better captured the true probability.
Analysis completed: November 26, 2025 Bankroll status: $875 available, $125 at risk (3 open positions) Next steps: Monitor market for Putin commitment signal or framework rejection that would trigger probability update and potential trade entry.