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A final look at Intrade
November 6, 2012 - Harry Eagar
I wish I had started following Intrade sooner, but as a non-believer in markets, I was not motivated.
What I've watched over the past couple weeks has not changed my views, but I am interested in the very high volatility of the presidential race market.
In a few days, Romney has gone as high as 45% and as low as 31%. Right now, Obama leads at 67.6% -- that is, you pay $6.76 for a chance to win $10.00.
If my brain had been more nimble (and if I didn't live in Hawaii where I was asleep during the crucial swings), I could have built a Dutch book -- a bookie term for a series of bets where you finish in the money no matter what.-- by arbitraging the differences.
I am not repining. I bought Obamas at considerably under $6.76 and could cash out now for several hundred dollars in profit.
I won't, though, because if you are persuaded by Nate Silver at 538 blog, the odds of losing are one in six. My bets pay off at better than 3 to 2.
You don't get many chances to wager on those terms. I think you have to put money on Obama even if you want Romney to win. And I wonder, how many Intraders bet against their political preferences on the theory that if your man doesn't get in, at least you'll have a payday. And if you lose money, at least your man won.
I should have checked 538, but I thought all the polls Silver was going to get were included in his Monday morning line.
Not so. He now has Romney's odds less than one in ten. Intrade is still paying almost 3 for 2. If you believe Silver, you are never going to see a more compelling wager.
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