Comments on: Watching the Markets

By: Cranky Observer

Cranky Observer — Tue, 02 Nov 2004 19:17:34 +0000

> Who would trade a single 6c option > for chrissake? Yet, it’s like that > there all the time. > > Can someone explain what goes on > there? Um, there is no such thing as a “market” in presidential election options the way there is in gasoline, wheat, or wheat futures? And therefore everything that happens on the Iowa Electronic “Market” is just game playing by people with too much money and time on their hands? And that furthermore, the Republican spin machine would think nothing of spending a few 100,000s to get a lot of otherwise left-leaning college professors seriously discussing how a “market mechanism” “proves” Bush is going to win? Just a thought. Cranky

By: abb1

abb1 — Tue, 02 Nov 2004 18:00:28 +0000

I opened an IEM account a couple of weeks ago and bought some options. This really is a teaching thing. For example, I placed an buy on limit order for 200 really cheap options, 6c/piece. My bid was inside the spread. Look how it was filled: Date Time Market Action Quantity Unit Price … 10/27/04 21:56:19 Congress04 Buy 1 0.060 10/27/04 21:40:50 Congress04 Buy 3 0.060 10/27/04 20:26:19 Congress04 Buy 1 0.060 10/27/04 20:24:00 Congress04 Buy 1 0.060 10/27/04 20:23:09 Congress04 Buy 9 0.060 … I expected to get all 200 in one lot. Who would trade a single 6c option for chrissake? Yet, it’s like that there all the time. Can someone explain what goes on there? Thanks.

By: Andrew Brown

Andrew Brown — Tue, 02 Nov 2004 11:40:51 +0000

Those of us too simple to bet on these things could, last night, get 5/4 on Kerry at Victor Chandler.

By: dsquared

dsquared — Tue, 02 Nov 2004 09:40:08 +0000

f’k me! Kerry now at 45% on the IEM! The spread on the Kerry contracts has now blown out to more than four percentage points while the spread on the Bush contracts is less than a percent. The liquidity has just disappeared on this market and it looks like something funny is going on.

By: dsquared

dsquared — Tue, 02 Nov 2004 09:36:13 +0000

Brian is right; I meant Wisconsin, but to be honest, all those states blend into one big lump of Marriott Hotels, uninspiring restaurants, crap nightclubs and meetings with surprisingly well-informed gentlemen working for “The Teachers’ Retirement System of …” to me.

By: Brian Weatherson

Brian Weatherson — Tue, 02 Nov 2004 09:29:21 +0000

I’ve moved the timestamp on this one back a few minutes so my crosspost goes below Daniel’s – it’s only because I’m so slow in typing that it was in later. I think that on the state-by-state results the Tradesports bettors might be taking the sensible position: Never bet against a relative of the guy running the election in a corrupt state. Having said that, Kerry’s Minnesota numbers looked fine to me. Up 6 in Zogby and 8 in the Strib. I’d be very confident on the conditional if Kerry wins Florida he wins Minnesota.

By: dsquared

dsquared — Tue, 02 Nov 2004 09:12:44 +0000

Also, glancing at the Tradesports numbers, the big oddity is that they only give Bush a 25% chance of taking Minnesota, but a 56% chance of winning Florida. Poll data would certainly suggest taking the opposite view on this spread; I think that this is an interesting natural experiment.

By: dsquared

dsquared — Tue, 02 Nov 2004 09:09:46 +0000

Cross post … I’ve just noticed the same thing (great minds think alike, fools seldom differ). NB that the single most probable outcome on IEM is still Bush with less than 52%. The IEM advantage to Kerry comes from the fact that a Kerry landslide is rated 20% probability while a Bush landslide is only 15%.

By: Detached Observer

Detached Observer — Tue, 02 Nov 2004 09:04:07 +0000

Tradesports has a popular-vote-winner contract as well, and it is, at the time of writing this, leaning towards Bush, the opposite of the Iowa Electronic Market. The nature of the tradesports site prevents me from linking to it but go to tradesports.com, click on politics -> us presidential elec. and scroll all the way to the bottom.