Here’s A Good Way to Trade the U.S. elections

The U.S presidential elections, from a trading point of view, are like every binary option out there. Heads, Hillary…Tails, Trump. The uncertainty and differences in popularity and what not translate, naturally into odds that can be traded, or more accurately, gambled on.

Now, I wouldn’t expect you to throw good money into gambling, but every now and then you have a little change that you wouldn’t mind having a bit of fun with. One way to throw that money at these elections would be to place a good old bet between friends. The other way, would be to buy contracts that pay you if your candidate of choice wins. And the best place to do so would be the Iowa Electronic Markets. They let you bet on individual candidates and the cost of the contracts reflect the odds of them winning. Currently, a Donald Trump contract costs 39 cents and has 2.6:1 payout odds, which means that if you’re right, a 39 cent contract will pay you roughly $1. That’s down from 11:1 odds just a few days ago (i.e. each 39 cent contract would pay $4.00+ if you win), which means that a lot more people are betting on Donald Trump either because they think he’ll win or because the odds were so good it was the better gamble.

The Iowa Electronic Markets began as an internet based research and forecasting tool created by the University of Iowa. They let students write and sell contracts on all sorts of events, betting between $5-$500 on the outcomes based on their detailed research etc. Because the students would win real money if they were right, they had the incentives to build accurate models, generate real data and make their forecasting as accurate as possible. The availability of contracts on political elections made the site fairly popular although it isn’t big by any means. For instance, yesterday, about 10,000 Donald Trump contracts traded, for a total of about $3,900. In fact, all the bests placed currently on the elections in IEM add up to under $120,000. That makes it a really small but fun market to play around in.

So there’s that. You can always skip all that and come place a bet directly with me @ eldivyn. I’m starting at $100.

If you’re really about it though and you want to truly bet big money on the U.S elections, the best way to do that would be to hit up the currency markets. You wanna bet on DT winning? Short the Mexican peso. To a lesser extent, short the renmibi because you know a devaluation will happen if DT wins. Or even if he doesn’t and the dollar keeps climbing. Either way, there’s a bit of homework to it, and currently that’s not my cup of tea. I have enough on my hands.

I did my betting the old fashioned way. Called up my friend and set a bet. My money is on Hillary.



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