gkrykewy said:
That is VERY interesting. I was wondering what the hell was going on with Intrade.
Also, lol Rouge Squadron.
Intrade isn't a pollster, it's just a market. I expect the big players to manipulate any market with the volume and frequency of their trades, but I don't care because I'm in a long-term position
so_awes said:
how does intrade work? if i bet on Obama and he wins, i double my money?
Intrade sets up a market for contracts, which trade between 0.0-100.0 points, which exactly correspond to 0-$10 (1 point = 10¢).
For an example, let's say we have $1,000 and look at a pretty heavily traded contract: AIRSTRIKE.IRAN.08. Reading the contract we see that it is fulfilled if the USA or Israel launch an overt (ie acknowledged) airstrike against Iran by 2359 hrs IRST, Dec 31 2008.
Currently, AIRSTRIKE.IRAN.08 is trading at 21 points (i.e. $2.10 per contract).
If we think this is going to happen, we should BUY. With $1,000 we can buy
476 contracts. If we are correct and the airstrike goes through by the deadline, the contract will close at 100 points and we'll make
$7.90 profit per contract and
$3,760.4 profit total. If we are wrong, the contract will close at 0 and we'll be out $1000.
If we think this is not going to happen, we should SELL. With $1,000 we can sell
126 contracts. We sell at $10-PRICE instead of selling at straight $PRICE because we have to cover our losses if we're wrong. If we're right, the contract closes at 0 and we make $2.10 profit per contract and
$264.60 total. If we're wrong, the contract closes at 100 and we lose $1000.