Prediction Markets & XM/Sirius

Cite this Article
Paul Gift, Prediction Markets & XM/Sirius, Truth on the Market (November 28, 2007),

I had never heard of Intrade before.  Maybe I live in a hole.

Let’s see here:  I’d love to short the bid for Dec. 07 if it wasn’t at zero.  No way I’d touch the 10 ask.  I think there’s over a 90% chance this goes into next year.  The bid/ask spread is so big for Mar. 08 and Jun. 08 (40/60 and 60/80, respectively) as to make them unattractive too.  However, if my hand were forced, I’d short the bid of 40 for Mar. 08.  I guess another way of framing that is to say I’m more likely to believe there’s at least a 60% chance this extends past Mar. 08 as opposed to the other “break even” alternatives of a 60% chance it doesn’t, a 40% chance it extends past Jun. 08, or an 80% chance it doesn’t.  This is all assuming a “buy and hold” strategy.

My actual strategy is…………………no purchase…………………..secret answer C.