10.04.12

Romney’s Political Futures Rising Sharply on Intrade

Romney’s political stock soars after debate.

This chart shows two things—the price for a “Romney to win presidential election” contract on Intrade, the electronic-betting market for current events, and the number of trades made on that contract over the last week. The closing price, the right-hand axis, is also the probability that Romney will win according to the trades made on the contract.

As you can see, the price of the Romney contract, and the probability that the Intrade market gives to his victory, have shot up in the last day, from around 26 percent yesterday to just more than 33 percent today. That’s a 29 percent jump, almost all of which can be attributed to the debate.

But as you can see, Romney had been trending up on Intrade since last week, when he hit a low of just above a 21 percent chance to win. Also, the volume of trades went up substantially today, meaning that not only were traders more optimistic on Romney’s chances, but a lot of them put money down on that opinion.

In the real markets, a near 30 percent jump in price for a contract in a day is huge news, but in politics, it’s getting over your opponent that counts. And Romney is still a long way away.

Matthew Zeitlin