3 ms·

Seconded. Wouldn't the results of the prediction market be calculated into the current value of the DOW? I mean, sure, there could be distress selling right now

• cschneid 18y ago
  Working through a thought process: 1) The stock market is a collection of all known information about the stock, including future predictions 2) You can see that in options, their value is tied to the value of the stock market at some point in the future, but you still calculate them based on the current value of the market, since that's what the current prediction is, giving the known info 3) Prediction Markets are just another kind of derivative. You are betting on a future value of the market. 4) That means, when it doesn't match up around the current value, there are inefficiencies in the market. 5) Why? Too few people? Dumb people? 6) Inefficiencies lead to arbitrage opportunities. Why not buy an option, and buy the other direction of the prediction market, and get paid either way? 7)??? 8) Profit.