16 February 2010
Large Spreads Are Not Worthwhile Money
Posted by albionmoonlight under: Prediction Markets .
If you read this blog, chances are good that you also read fivethrityeight.com. And, if you were there recently, you noted some analysis describing why the markets might be pricing a GOP takeover of the Senate too highly. Upon reading that analysis, your first thought may have been like mine–go to Intrade and see what the action looks like.
And, if you went, you saw something that should have stopped you in your tracks immediately:
Whatever your feelings about the GOP, Nate Silver, or placing futures bets in February for elections that will happen in November, the insane spread on that bet should make it a 100% stay away from either side.
Until these markets become liquid enough to create reasonable bid/ask spreads, they are simply not worth your time or money, period.
One Comment so far...
Jesse Livermore Says:
16 February 2010 at 12:04 pm.
Of course, you can make your own bids and asks. Want to sell it at 35? Just offer it for sale and see if anybody bites. There’s not going to be a lot of fast-paced news, so it’s not dangerous to just leave offers up for a couple days.