2016-08-22

Betting on Trump

Trump remains about 4.5:1 odds at the Iowa Electronic Markets. The contract is a winner-take-all option. It expires worthless if the candidate loses, or pays $1 if they win. The much smaller and very thinly traded Vote Share Market has Clinton up 60-40. The VSM pays out based on the two party share of the two-party popular vote, excluding any other candidates. Recent polls have third-party candidates around 10 percent; a 60-40 split is 54-36 percent split of the two part vote. If third parties received 20 percent of the vote, it puts Clinton at 48-32 percent, but polls show she falls to about 41 percent in a 4-way race, with Trump at about 37 percent, or about 52-48.

The market is betting on the race not narrowing at all and actually widening into the fall.

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