Iowa Futures
Posted on 10/11/2004 5:52:48 AM PDT by drangundsturm
Current PRESIDENT.GWBUSH2004 spread:
1000 contracts BID at 58.0
No ASK has more than 64 contracts up to the 61.0 price
(Excerpt) Read more at tradesports.com ...
The futures contract price is equal to the market's view of the probability of Bush winning the election, and currently stands at 59, equating to a 59% chance of Bush being re-elected. Academic studies have shown that markets are more accurate than polls in predicting outcomes of elections.
Looking at the internals of the BID/ASK spreads, the market is currently showing strong support at 58, meaning traders believe there is profit to be made by buying at 58. But, there is no serious resistance until 61. That means the market could be set to move higher today. Of course, traders may adjust their BID/ASK prices at any time, usually based on new information that emerges, this analysis is only a snapshot in time.
Where can I buy these futures ?
http://www.tradesports.com (click on Politics, then Presidential Election, then scroll down to find PRESIDENT.GWBUSH2004 contract).
Please be aware that if you trade, you must be able to put aside your partisan views and objectively evaluate events as they unfold, good or bad, for the candidate. One academic study concludes that partisan traders do not fare well in these markets.
The markets currently are showing a few percent chance that bush will win without taking the majority of 2-party votes, and this explains the difference between the prices in these 2 markets.
Arbitragers insure the two markets remain consistent approximately within the range of transaction costs.
Also encouraging is the probability of winning OH and FL, both over 60%. Bush cant lose if he carries these two.
The dip immediately after the debate Friday night was probably due to Dem operatives selling short in an attempt to cause panic selling to boost Kerry's overall 'sales attractiveness' - but the volume was thin and ONLY Bush contracts were trading - given the 'open interest' it would seem that this was a temporary dip- two things I learned as a commodity options trader- "you cant fool the market"-meaning that the collective information and wisdom of ALL the traders will eventually prevail in spite of attempted temporary manipulations- and "bet with your hip, not with your heart" - if you get my meaning
Buy now and reap a nice profit on November 2nd.
It may not have been a dem operative the other night, just a nervous trader. Could have been someone sitting on a profit and not wanting to wait to see the debate 2 spin. Not much volume at all so hard to say.
I pay a lot more attention to the volume of contracts currently showing in the bid/ask data than the last trade price. That shows you where the smart money believes profitable trades are. So right now someone willing to risk $6000 is saying that he (or she) believes that buying at 58 would be profitable (meaning 58 is actually an underestimate of bush's chances of winning, because nobody would make a trade just to break even), but you can't find a similar contract on the sell side until all the way up to 61.
"Bush cant lose if he carries these two."
The latest trades today are FL 62.5 and OH 59.0. Actually, TradeSports|com has a JOINT probability contract for FL AND OH, which is at 52.2 Bid and 55.2 Ask, with no trades so far today. That's uncomfortably close to an electoral toss-up.
Then they are totally wrong on OH, because OH ain't that close. W by 8% here when it's all over.
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