Posted on 11/03/2006 3:34:27 PM PST by oblomov
This is a favorite topic of mine. In investing, we can look at two markets and imply a third. That's basically how options work. Well...we can do the same for predictions markets.
At Tradesports, they offer futures contracts for how many seats they Democrats will pickup in the house. They offer contract for several different scenarios (i.e., greater than 14.5 seats, or greater than 19.5 seats). Assuming a logonormal distribution, we can find an implied mean and standard devation.
The chart above shows the mean number seats the Democrats looks to gain (black line) with plus and minus one standard deviation bands (red lines).
(Excerpt) Read more at crossingwallstreet.com ...
I've been trying to put a tradesport ticker on my page. You know how to do it?
this is the general idea behind darpa's terrorism event futures market, and at the theoretical level made very decent sense. I don't think it was intended to become a MSM target, and was gutted, at least publicly.
I don't think your post will be popular though.
For those who feel very confident that the polls are oversampling Dems, you can pick up a GOP Senate / GOP House contract on Tradesports and quintuple your money if right.
As long as they have many participants. Tradesports markets haven't had the most extraordinary track record.
That sounds like an easy way to make money
People invested heavily in "Dot Coms" in the late 90's only to watch them fall apart, all the while sustained and supported by the Clinton adminstration.
Perhaps all these people "investing" are people who are simply following the liberal polls. Much the same way the Clinton regeime touted the "new economy" they are embracing a future as promoted by liberal polling.
And as we have seen so many times before, liberal hopes seldom reconcile with the reality of a given situation.
How could you know that oversampling Dems is not cover for anticipated voter fraud?
If the GOP retains majorities in both houses, it will be. But approximately 80% of people are betting against that happening...
I don't think they are statistically independnet, though. Things like Kerry's foot-in-mouth incidents may have small but non-trivial effects in many districts. Two probabilities that can both be affected by a common event are not independent.
Looks like a lot of people are betting on the Dems to take the House, if I understand it correctly.(which I probably dont..)
I think there will be alot of upset people one way or the other
Who did they predict for 2004? If they picked Jon Carry then we can take this with a very large grain of salt.
Glennbeck.com has one , you could look at the source for their page...
As for the validity of Tradesports calling elections inside the US , you must know that the majority of betters are Europeans and they are getting their info from sources like the BBC , Reuters and CNN International ,, all socialist all the time networks. I'd put a bet down on maintaining house control..
And the traders are basing their decisions on what? Polls?
Excellent observations. I mean, look at the Corker (R-TN) futures for the Senate. He's ~70.0 now, largely on the back of the public polls having him ahead by 8-10 points. However, NRO Corner reported today that GOP internals have Corker up by only 1-2 points and are mystified by the disparity with the public polls. If the GOP internals are correct, Corker should be trading in the range of only ~55.0-60.0.
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