2 ms·

Is it actually possible to make money against these small odds predictions? If I look at this page, it has dems win by 215+ at 2 cents. https://www.predictit.or

Is it actually possible to make money against these small odds predictions? If I look at this page, it has dems win by 215+ at 2 cents. https://www.predictit.org/markets/detail/8077/What-will-be-the-Electoral-College-margin-in-the-2024-presidential-election https://www.predictit.org/markets/detail/8077/What-will-be-t... So I buy a "no" contract for 98 cents, and sell it for $1 in most of a year. Maybe someone who has used the platform can chime in, but the terms of service seem to suggest I don't get any interest on my contract money meanwhile. So I'm underwater already probably, then I pay 5% to the platform when I withdraw. Obviously the time-value thing gets better as the end approaches, but you'd expect most low-probability events to decline in price too.

rspeele 3y ago
You are absolutely correct. It doesn't make sense to buy that contract unless you already have the money in your PredictIt balance, you want to keep it there as "dry powder", and you really can't think of a better market to park it in (unlikely). Time value of money being what it is... contracts like that have a pretty dead market. There is no reason to hold either the longshot YES that's realistically less than 1% likely OR the tie-up-your-dollar NO. Of course if you already have a balance on PI, you just won in another market, and say it's Nov 6th and you've got nothing better to do... you might as well buy 99c shares because the $1 payout could be in as little as a couple days and what else are you doing with the money? So the high priced shares DO eventually sell but basically anything that's months away dies out in trading volume before it reaches the 99c mark. Personally if I still had money sitting in PI I'd probably park my dry powder in NO on "Joe Biden resign in his first term", which has been as high as 10c this month, but even assuming I could get 90c NO shares that is not worth me moving money from my bank back into PI just to skim those pennies.
deleted 3y ago
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iouwhldkfjgklj 3y ago
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- recursivecaveat 3y ago
  The article is basically asking why the smart money hasn't pushed the No contract to trading for 99.9 cents or something. I'm saying the smart money would walk away at 96 cents or so because it's a lose-lose at that point.

rspeele 3y ago

You are absolutely correct. It doesn't make sense to buy that contract unless you already have the money in your PredictIt balance, you want to keep it there as "dry powder", and you really can't think of a better market to park it in (unlikely). Time value of money being what it is... contracts like that have a pretty dead market. There is no reason to hold either the longshot YES that's realistically less than 1% likely OR the tie-up-your-dollar NO. Of course if you already have a balance on PI, you just won in another market, and say it's Nov 6th and you've got nothing better to do... you might as well buy 99c shares because the $1 payout could be in as little as a couple days and what else are you doing with the money? So the high priced shares DO eventually sell but basically anything that's months away dies out in trading volume before it reaches the 99c mark. Personally if I still had money sitting in PI I'd probably park my dry powder in NO on "Joe Biden resign in his first term", which has been as high as 10c this month, but even assuming I could get 90c NO shares that is not worth me moving money from my bank back into PI just to skim those pennies.

deleted 3y ago

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iouwhldkfjgklj 3y ago

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recursivecaveat 3y ago
The article is basically asking why the smart money hasn't pushed the No contract to trading for 99.9 cents or something. I'm saying the smart money would walk away at 96 cents or so because it's a lose-lose at that point.