23July2010
Posted by QuikSand under: Prediction Markets.
We have written here (sporadically, I’m aware) about opportunities that show up in the true markets at Intrade — a site that tries to cover a lot of ground and subjects for a wide range of audiences (though, disappointingly, they have not really expended into sports, even after their TradeSports branch withered away). However, given the name of this site… I want to explore issues raised privately by a number of the readers here.
Where, exactly, is the *worthwhile* money?
It’s a good question.
The biggest problem with the Intrade site, right now, is not the concept. It’s the execution. The breadth of their offerings, and (likely) the limited number of people who actually understand and follow this sort of thing leave us pitifully thin in the hosted markets.
So, rather than looking at an item that seems most interesting or appealing to you or me, our best bet to really nail down a deeper market is likely to appear where the largest number of bettors are involved.
Along the top of the Intrade site’s main page are tabs for “Most Traded Financial” and “Most Traded Political.” These tabs are going to be the key to finding markets with sufficient depth to make a real cash, in the event we find something worth upending.
Today, among the leaders in financial markets, is — well, the financial market. 
Let’s look at the market for whether the Dow Jones “Big 30″ index will exceed 10,000 at year’s end. Note the necessity to stick with big, round numbers. The people, even those sophisticated enough to play this sort of game, are essentially like raccoons and are inevitably drawn to shiny objects (round numbers, in this case).
While there’s respectable depth here — it really isn’t even that impressive, even for one of the hottest items in the field. To BUY shares as of this writing, the price is $57 — but only for 16 shares (and those are tenth-shares in the Intrade tradition). So, the most you can do at that price is buy about $91 worth in an effort to win about $160. Nothing inherently wrong with that, but that’s not exactly a huge hit. If you want to immediately get deeper into this market — say, to win $1000 — you need to buy at several price points, buying all the way up to a price of $62.
And THAT remains the key weakness of these markets. There just aren’t enough players to make each market viable. This is the market for the $10,000 price point (a nice round number), for the Dow 30 (the most visible stock index in the world), at the end of the current year (the single most obvious future time period). So, why does Intrade insist on offering us other options so similar that they clearly undermine this obvious market? What do they gain by offering, for instance, futures on whether the Dow 30 will exceed every $500 increment from $7,000 to $15,000 at that same time period? Wishful thinking, perhaps? Or just poor planning?
Either way, the breadth of their offerings, while noble, is a disservice to those of us looking for worthwhile plays. All too often, it’s not worth the time and effort required to find a good play on Intrade, only to determine that the “good price” shown on the market summary is only available for a handful of dime-on-the-dollar shares.
More to come on finding angles in these too-broad laddered markets. All hope may not be lost.
6July2010
Posted by QuikSand under: Prediction Markets.
The weeks (months? years?) long spectacle of LeBron James’s free agent signing in the NBA appears ready to close out. While sports has not been the most fruitful area for those following Intrade, this sort of “sports event” seems like their cup of tea. And the cup…well… runneth over.
I’ll be brief:
At WSEX: BUY shares of LeBron to sign with Cleveland at $45 each
At Intrade: SELL shares of LeBron to sign with Cleveland at $60 each
As usual, it’s the depth of the Intrade market that’s the weakness here — but there are enough buyers right now to make this appealing for at least a few hundred.
If nothing else… if you think the well-informed market suggesting that Cleveland is the most likely destination is on target… then a play on Cleveland in the deep pseudomarkets at WSEX looks like a good gamble. Get in.
10May2010
Posted by QuikSand under: Prediction Markets.
Kansas City media reporting that the Big Ten has formally made offers to:
Missouri
Nebraska
Notre Dame
Rutgers
See our previous comments on the potential to have more than one school pay off in this market at Intrade.
10May2010
Posted by QuikSand under: Prediction Markets.
The rumor mills continue to fly regarding possible expansion of the Big 10 football conference in time for next year’s play. We have previously noted going “all in” (as much as the shallow market would permit) on a previous University of Connecticut rumor at at attractive 9-1 price. Now the rumors suggest that the conference may be looking toward a massive expansion to include even more schools, as many as five additions this year, to become a “super conference” with two separate divisions and a year-end championship game.
The Intrade markets read as follow — using Rutgers as an example:
Which College will be asked to join the Big 10 Conference?
Rutgers to be invited before midnight ET 31 Dec 2010 to join Big 10 Conference
“Which College” suggests one school, of course. But the wording seems to suggest that multiple schools could *each* pay off at $100.
For details, check Intrade, under Current Events, Big Ten Expansion. Right now, the markets are so pitifully thin as to be mostly unusable… but if that changes, there’s at least the potential for a poor construction/wording to result in a multiple payout and substantial underpricing of the odds.
10May2010
Posted by albionmoonlight under: Prediction Markets.
In case you have not heard, President Obama will nominate Elena Kagan to the United States Supreme Court.
However, if you look at the (not so) fine print of the InTrade contract, you see that it only pays off if General Kagan is sworn in. This explains her price sitting in the high 90s right now and not at 100.
Based on the fact that she has already been through a nomination process with this Senate recently, and the perception that she is a moderate choice, and the fact that the President has 59 Democratic Senators with some incentive to keep him from getting major egg on his face in a mid-term election year, General Kagan seems like as close to a sure thing as one could expect at this stage.
So, the question for you is whether you want to jump in at the high 90s on this almost sure thing, or whether you want to bet on the Black Swan.
Personally, this market looks to me like it is priced pretty fairly, all things considered. But your opinion may differ.
7May2010
Posted by QuikSand under: Prediction Markets.
Today the rumor mill has run overdrive talking up Elena Kagan as the imminent announcement for the open Supreme Court Justice seat.
Intrade has a market for the successful nominee, and the current ASK price there has rocketed up to 80…with the price building in a growing expectation over the last several days, but jumping even higher into “firm” territory today. Expect an announcement by Monday, it seems.
7May2010
Posted by albionmoonlight under: Prediction Markets.
The Current Thinking for the President’s pick to replace Justice Stevens is that General Kagan is a “done deal.” As this article points out, however, the media almost certainly expresses a level of certainty here that actual facts do not support. The President simply does not share this information widely. And, since General Kagan was always the frontrunner, the media would probably be writing “Kagan is a done deal” stories in almost any scenario in which she had not been affirmatively eliminated.
Now, most people (myself included) still think that General Kagan is more likely than not the choice. But there still may be some movement (and money) to be made this weekend.
If these “done deal” stories take root, then we could see Kagan’s intrade price move into the 90s. At that point, I would sell any Kagan shares. As I hope the linked article notes, we outsiders do not have 90%+ certainty about Kagan’s chances. Along those same lines, I would say that the prices for the other short-list candidates are still too high. But, this weekend, those prices could come down in reaction to the Kagan news. I would think that if you can buy some Diane Wood for <10, that is a risk worth taking.
Of course, the lack of liquidity in these markets may keep these prices from moving too much. For example, I would expect that the folks who bought Judge Wood earlier did so knowing that she was a longer shot than General Kagan. They were in it either to sell after a Wood rumor spiked the price or in hopes that she pulls off the upset. I’m not sure why Kagan “done deal” stories would cause them to sell at a loss because it does not really change the dynamic for the Woods buyers. At this point, you would think that they have settled into “hold and hope she makes it” mode with their shares.
Anyway, the next few days probably represent the most likely time that you may see some worthwhile action in this market. Good luck.
20April2010
Posted by QuikSand under: Prediction Markets.
With rumors flying about that the Big ten athletic conference may be about to launch an expansion, we see a shallow and poorly-shaped market for this move over at Intrade. While this isn’t exactly sports, it does feed from sports, and the murky mess that is college athletics.
Reading the speculation, most see the likeliest expansion targets being Notre Dame, Rutgers, Syracuse and Pittsburgh — and the Intrade prices seem to generally reflect that: at “ask” prices of 35, 35, 30, and 20, respectively.
Today, we sadly had to fully occupy a segment of this market, purchasing all the available shares of “Other” at a price of $10. The University of Connecticut was not included in the original offering at Intrade, and we see that as a worthy offering price, as they are in the conversation. Just a speculative play - and sadly the first time I have been moved to completely upend a market there prior to posting about it.
Hopefully, more public talk about this potential change might fluff up the action in this market.
10April2010
Posted by QuikSand under: Prediction Markets.
Good read at 538.com on potential nominees for the opening seat on the US Supreme Court:
The National Review’s Daniel Foster has an ordered list of what he considers to be the four most likely Supreme Court nominees, sorted “from left to lefter”. In that order, he lists Merrick Garland, Elena Kagan, Diane Wood, and Pamela Karlan.
Most other people that I’ve read today seem to agree with that ordering — although many of them seem to consider Karlan less likely and not a part of the short-short list. I don’t know whether their characterizations of each candidate’s judicial philosophy is accurate or inaccurate — but it does seem to be the conventional wisdom.
Certainly, there are a few legal scholars and Supreme Court correspondents out there who are qualified to know in something approaching an absolute sense each of these people might preside. For the rest of us, however — and by “us”, I mean other people who cover politics for a living — we’re really just kind of winging it and our impressions of each candidate’s ideology will be formulated only in a relative sense.
More from National Review Online:
SCOTUS Short-List: from Left to Lefter
Obama’s Next Justice
if this market follows the recent trends, its overall visibility will be high, meaning active markets at a spot like Intrade, and some rapidly shifting sands as rumors and speculation get well ahead of any true selection process.
1April2010
Posted by QuikSand under: Prediction Markets.
Okay, I confess that the television phenomenon American Idol is not my cup of tea. But I enjoy speculating on sports, and basically that’s what this stuff is… but the technical absence of a ball or scoreboard seems to keep this on the list of things intrade is willing to cover. Okay, then.
I’ll start with a not-terribly-informed thought. Even if everyone seems to think that Crystal Bowersox is the obvious top talent in the bunch, haven’t we seen with this enterprise that it may be a combination of gender appeal, inoffensiveness, and other such things that can easily triumph over perceived talent?
After all… my joking aside, this really isn’t a contest of skill like a true sport. It’s some weird combination of high school student council, demographic politics, and class warfare. Or something like that.
My bottom line? $57 a share is a boatload to pay for a share of someone at this point just because you think she’s the best singer.