What are the odds?
By John - July 15th, 2010
'What are the odds of ______?' It is often difficult to get a straight answer to this simple question. Sometimes a person simply wants to know the odds of what will happen as apposed to reading opinions of what should happen.
For quite some time I have been looking to intrade.com for answers and enjoy watching an open market make predictions. If you want a simple honest opinion about how a future event will turn out - look to a group of people who put their money where their mouth is. 'Unbiased' news reports may attempt to fairly represent all viewpoints with 'equal time' while also addressing what should happen. But, if a fast honest opinion about what will happen is what you really want, markets like intrade.com is your solution.
Generally speaking, if a contract is liquid and has a tight spread, a trading price of 57.0, for example, implies market participants are predicting, with a 57% chance of certainty, that the specified event will occur. Here are a few contracts that caught my eye this morning and have also been in the news recently. The charts are 'live' (continually updated):
Intrade.com's prediction markets are essentially a futures market. Contracts are bought and sold by traders. These contracts reach a target value of 100 or become worthless at an expiration date depending on the outcome of the specified event.