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Options on real life events


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Intrade is a prediction market, you buy option on  yes or no events (Obama will be elected in 2012)- If the event come true, the option is worth 10$, if it doesn't it's worth 0$.

You have predictions in various fields, from whether the god particle will be discovered by 2013, or on what price the DOW will closed.


The bets are using real money, but pretty small amounts. It's like a casino, but the odds aren't stacked against you- it's a zero sum game.


This site is great for 2 reasons:

1. Markets are more efficient than any survey. If you want to know the odds of obama being elected, you can see the price of the option is 6.06 and know he has 60% of winning- and this is as accurate as you're gonna get, since the traders trying to make money use all information available. It has been proven in research that prediction markets are in fact the best predictors.


2. As a value investor, I use this as a hobby, it's great practice to finding inefficiencies and you use the same state of mind as in investing. Right off the bat  I can see that Mitt romney has 81%, and Newt and Santorum have 4% each to be the republican nominee. Something is inefficient here- The odds none of them will be the nominee is more like 1-2%, and there's a chance to make money here by using simple math and building you position so that you win a little no matter who wins.


I highly recommend it, it's a lot of fun!




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