Comments on: The market moved but is it news? http://www.midasoracle.org/2007/12/20/the-market-moved-but-is-it-news/ Prediction Markets For All Thu, 04 Dec 2008 00:25:00 +0000 http://wordpress.org/?v=2.6.5 By: Jason Ruspini http://www.midasoracle.org/2007/12/20/the-market-moved-but-is-it-news/#comment-16589 Jason Ruspini Sat, 22 Dec 2007 18:41:49 +0000 http://www.midasoracle.org/2007/12/20/the-market-moved-but-is-it-news/#comment-16589 Whatever the data from the less liquid market shows, my "hypothesis" also explains the volume surge on August 21st-22nd, one week after margin rates for long-term nomination contracts officially tripled. In terms of high-volume days over the history of the Obama nomination market, those days rank #1 & 2 and saw more volume than the preceding 74 days combined. Although Obama had been sliding since the Castro comment in late July - what looks like a pretty clear catalyst in retrospect - it was this last burst of volume that sent the contract down into the mid-teens and prompted Dylan Ratigan on CNBC to say, explicitly referring to an Intrade chart, "So basically Obama is down the toilet.. poof.. see ya", on the August 22nd "Fast Money". Clinton and most other nomination contracts also saw large spikes in volume that week. Giuliani's contract didn't have a volume spike - but margin changes might also explain the unusual volume patterns that I talked about in March. Whatever the data from the less liquid market shows, my “hypothesis” also explains the volume surge on August 21st-22nd, one week after margin rates for long-term nomination contracts officially tripled. In terms of high-volume days over the history of the Obama nomination market, those days rank #1 & 2 and saw more volume than the preceding 74 days combined.

Although Obama had been sliding since the Castro comment in late July - what looks like a pretty clear catalyst in retrospect - it was this last burst of volume that sent the contract down into the mid-teens and prompted Dylan Ratigan on CNBC to say, explicitly referring to an Intrade chart, “So basically Obama is down the toilet.. poof.. see ya”, on the August 22nd “Fast Money”.

Clinton and most other nomination contracts also saw large spikes in volume that week. Giuliani’s contract didn’t have a volume spike - but margin changes might also explain the unusual volume patterns that I talked about in March.

]]> By: Chris. F. Masse http://www.midasoracle.org/2007/12/20/the-market-moved-but-is-it-news/#comment-16583 Chris. F. Masse Thu, 20 Dec 2007 21:11:49 +0000 http://www.midasoracle.org/2007/12/20/the-market-moved-but-is-it-news/#comment-16583 The way to infirm or confirm Jason Ruspini's hypothesis is to compare InTrade historical prices with BetFair ones. In the coming weeks, I will publish a bit about that issue. The way to infirm or confirm Jason Ruspini’s hypothesis is to compare InTrade historical prices with BetFair ones. In the coming weeks, I will publish a bit about that issue.

]]> By: Jason Ruspini http://www.midasoracle.org/2007/12/20/the-market-moved-but-is-it-news/#comment-16582 Jason Ruspini Thu, 20 Dec 2007 19:36:51 +0000 http://www.midasoracle.org/2007/12/20/the-market-moved-but-is-it-news/#comment-16582 In this case it was #2. A margin change at Intrade forced some leveraged long Obama traders out of their positions. These markets are still illiquid enough that if I were willing to maintain an interest-earning Intrade account, this would not have played out the same in August and the whole situation is regrettable. So it's more that there was something in the price that wasn't information (according to your assumed interpretation of the price) than information being missing from the price. In this case it was #2. A margin change at Intrade forced some leveraged long Obama traders out of their positions. These markets are still illiquid enough that if I were willing to maintain an interest-earning Intrade account, this would not have played out the same in August and the whole situation is regrettable.

So it’s more that there was something in the price that wasn’t information (according to your assumed interpretation of the price) than information being missing from the price.

]]>