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Q: How does intrade work? ( No Answer,   4 Comments )
Question  
Subject: How does intrade work?
Category: Business and Money
Asked by: pcventures-ga
List Price: $10.00
Posted: 16 Oct 2005 06:09 PDT
Expires: 15 Nov 2005 05:09 PST
Question ID: 580890
No matter how many times I read their site, I still can't figure out
how intrade works.
 I think it's interesting that through Intrade a person can place a
sort of "bet" on a particular event happening.
 What I find most interesting is that there's a "contract" that Bin
Laden will be captured or neutralized by Dec 31 of this year.
 I'm sure this won't happen, so I want to structure a bet "against" this happening.
 How would I do this on Intrade?  
 For the record, this is one bet I'd be almost happy to lose...
Answer  
There is no answer at this time.

Comments  
Subject: Re: How does intrade work?
From: jago8-ga on 16 Oct 2005 13:57 PDT
 
It works just like any other futures market.  If no researcher picks
this up in a day or two I'll tell you how to structure your Osama bet
if you like, but you should be able to work it out from the "How Does
It Work?" "Show Me How How to Place an Order" George Bush re-election
example in the Help & FAQS.  I'm not meaning to be unhelpful, but it
is not a good idea to get into futures trading if you don't understand
it - it could cost you a lot of money.
Subject: Re: How does intrade work?
From: pcventures-ga on 16 Oct 2005 18:01 PDT
 
jago,

I promise to exhause the site's resources, if you
agree to tell me how to construct the "osama" bet.

Thanks!
Subject: Re: How does intrade work?
From: esmjb-ga on 16 Oct 2005 18:19 PDT
 
if you believe this event will not occur then you must sell contracts.
 you can do this by selling the best bid (currently 7.5) or by working
an offer, meaning offering to sell it at any price, say 9, and then
hoping somebody else buys it from you. lets say you sell one contract
at 7.5, the most you can earn is 75 cents if osama is not captured. 
however, if you sell one contract at 7.5 and he is captured, well the
contract expires at 100 and you have just lost $9.25.  to me this is
an extremely poor risk/reward ratio and i wouldnt even consider making
this bet but to each his own...
Subject: Re: How does intrade work?
From: jago8-ga on 18 Oct 2005 13:50 PDT
 
Yep of course esmbj is right, you need to sell the osama contract. 
The fact that the price is as low as 7.5 (= 75 cents) menas that
nearly everyone agrees with you that he won't get captured by 31/12. 
If you sell enough contracts that you make a nice little profit if
you're right - say you aim for $75 profit - well then if you're wrong,
your loss would be $925 (and that's all ignoring transaction fees ). 
I agree with esmbj that this is prettty bad odds.....

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