http://www.midasoracle.org/2008/02/07/tax-futures-in-real-life/ Prediction Markets For All Sat, 30 Aug 2008 10:48:43 +0000 http://wordpress.org/?v=2.6.1 http://www.midasoracle.org/2008/02/07/tax-futures-in-real-life/#comment-16852 Taxes are the largest class of risk people don’t hedge. Our Jason Ruspini (allied with InTrade) wants to change that. | Midas Oracle .ORG Thu, 14 Feb 2008 11:18:54 +0000 http://www.midasoracle.org/2008/02/07/tax-futures-in-real-life/#comment-16852 [...] Tax Futures, “In Real Life” - by Jason [...] [...] Tax Futures, “In Real Life” - by Jason [...]

]]> http://www.midasoracle.org/2008/02/07/tax-futures-in-real-life/#comment-16833 Jason Ruspini Thu, 07 Feb 2008 17:28:09 +0000 http://www.midasoracle.org/2008/02/07/tax-futures-in-real-life/#comment-16833 Chris, These are pretty good for now: . https://www.intrade.com/jsp/intrade/trading/t_index.jsp?selConID=177448 https://www.intrade.com/jsp/intrade/trading/t_index.jsp?selConID=177448 . I have a simple model of what the tax option prices should be based on the above scenario prices. I have to estimate the probability of a Bush tax cut extension in each scenario. No doubt those estimates are wrong, but as the contracts trade I hope to be able to back-out better estimates, which could then be used by a market maker to set prices. But based on my estimates, the current prices for the 2011 >38% contracts are reasonable and do not reflect any insurance premium. . (I asked Intrade if they could provide even a nominal carry in these contracts such as 1% but they understandably didn't jump at that.) . After the elections, you can use the yield spread between tax-exempt and taxable bonds as an indicator. Also at that point I hope that traders interested in politics will migrate over to these contracts. Chris, These are pretty good for now:
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https://www.intrade.com/jsp/intrade/trading/t_index.jsp?selConID=177448
https://www.intrade.com/jsp/intrade/trading/t_index.jsp?selConID=177448
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I have a simple model of what the tax option prices should be based on the above scenario prices. I have to estimate the probability of a Bush tax cut extension in each scenario. No doubt those estimates are wrong, but as the contracts trade I hope to be able to back-out better estimates, which could then be used by a market maker to set prices. But based on my estimates, the current prices for the 2011 >38% contracts are reasonable and do not reflect any insurance premium.
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(I asked Intrade if they could provide even a nominal carry in these contracts such as 1% but they understandably didn’t jump at that.)
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After the elections, you can use the yield spread between tax-exempt and taxable bonds as an indicator. Also at that point I hope that traders interested in politics will migrate over to these contracts.

]]> http://www.midasoracle.org/2008/02/07/tax-futures-in-real-life/#comment-16832 Chris. F. Masse Thu, 07 Feb 2008 14:51:46 +0000 http://www.midasoracle.org/2008/02/07/tax-futures-in-real-life/#comment-16832 Same question as the ones I asked to David Pennock. . Could you list the URLs of some good advanced indicators for this series of prediction markets? Same question as the ones I asked to David Pennock.
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Could you list the URLs of some good advanced indicators for this series of prediction markets?

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