Intrade has Contracts for Beating the Spread on Polling Numbers

Intrade ^ | October 25, 2008 | Intrade

[cmj328]

I think I've finally figured out how to read it. Here are the implied bets based on the current bid prices 3.3, 33.0, 55.0, 66.0 and 80.0.

Difference from final RCP average	=	Implied Bet	How to calculate implied bet
+5 to +100	=	3%	(>5.0 bid price)
+2.5 to +4.999	=	30.3%	(>2.5 bid price - >5.0 bid price)
0 to +2.499	=	21.7%	(>0.0 bid price - >2.5 bid price)
-2.5 to -0.001	=	11%	(>-2.5 bid price - 0.0 bid price)
-5.0 to -2.499	=	14%	(>-5.0 bid price - >-2.5 bid price)
-100 to -5.001	=	20%	(100 - >-5.0 bid price)

I'm guessing you can bet the last bracket by shorting the >-5.0 contract.

[Kevmo]

I have no idea what an implied bet is. The following exchange from the Intrade forum might shed some light on this issue.

According to the contract specific rules on the “Poll Spread” contracts, if the difference is 4.6% then that shows up as greater than 5.0%?

Can Intrade please explain this?

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This market will compare the percentage point spread between Barack Obama and John McCain in the final Real Clear Politics (RCP) poll average (RCP Obama minus McCain) with the percentage point spread between the share of the 2008 presidential election popular vote received by Barack Obama and John McCain (Actual Obama minus McCain).

If the difference in the two spreads is greater than the number of percentage points specified in the contract then the contract will expire at 100. If the difference in the two spreads is not greater than the number or percentage points specified in the contract then the contract will expire at 0.

If RCP do not publish a final poll average then the RCP poll average published at 5:00pm GMT on November 3rd will be used for expiry purposes.

For expiry purposes the popular vote is defined as the number of registered voters casting a vote. The official popular vote figures published by the Federal Election Commission (FEC) will be used for the expiry of this market. Please note that these may not be available until several weeks after the election. This market will remain open until these figures are available. If no timely figures are released by the FEC then we will use figures published by the US Census Bureau.
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Example of expiry:

The final RCP poll average has Barack Obama at 50.5% and John McCain at 45.0%. The spread is therefore 5.1% points.

The popular vote figures show that Barack Obama received 48.0% of the popular vote and John McCain received 47.5%. The spread is therefore 0.5% points.

The difference in the spread is -4.6% points (0.5% points less 5.1% percentage points). The expiry of this market will therefore be:

RCP.SPREAD.ERROR>5.0% expired at 0
RCP.SPREAD.ERROR>2.5% expired at 0
RCP.SPREAD.ERROR>0.0% expired at 0
RCP.SPREAD.ERROR>-2.5% expired at 0
RCP.SPREAD.ERROR>-5.0% expired at 100

Due to the nature of this contract please also see Contract Rule 1.7 Unforeseen Circumstances.

The Exchange reserves the right to invoke Contract Rule 1.8 (Time Protection) if deemed appropriate.

__________________________________________________________

GAW838

Director

Joined: 10/09/2007 01:39:47
Messages: 792
Online
ko and Ethan:

You’re problem is that you interpreting >-5 in terms of magnitude rather than simple value.

-4.6 is in fact greater than -5. If you need to convince yourself of this, subtract -5 from -4.6 [-4.6-(-5)= -4.6+5=.4>0]

So, the greater than -5 spread difference should be interpreted to mean that Obama should not overperform / McCain should not underperform the final RCP spread by more than 5 points. They had to pick one direction as the positive value, and that was an arbitray decision.

Hope that clears things up. As far as I see, there is no error in the contract rules.