crickets... I have same question
You pay commission on the winning contract, not the net win. That eats up the arbitrage opportunity.
You pay commission on the winning contract, not the net win. That eats up the arbitrage opportunity.
Yes, you would earn 3 cents, as I understand it.
As far as I understand it, only one of those options will be true.
In this case, it was the Democrats who took the house, so your NO bet on GOP for $0.66 would get you $0.34/share.
The other NO options would become worthless. Assuming you bought equal shares of both NOs, you would have gotten a $0.03 profit per share when you factor in all your NO bets:
$0.34 (NO GOP profit) - $0.31 (NO DEM loss) = $0.03
My math or thinking may be wonky but I believe that's how it should calculate for you.
The sites charges a commission of 10% of your profit, so in the above example you bought the No on the GOP for $0.66 and you receive $1.00 when it resolves. The $1.00 represents $0.34 in profit, so you pay a $0.03 commission for selling that share. So you only net $0.97, which was what you paid for both No. If in fact the GOP had won, your profit would have been higher, you bought the No Dem for $0.31, and it resolved for $1.00, which is a profit of $0.69, so you pay a commission of $0.06 or $0.07 (depending if they round or trunc). So in that case you actually lose money.
Vahe Poladian
I have a question. To give some background, let's consider this market:
https://www.predictit.org/markets/detail/2704/Which-party-will-control-the-House-after-2018-midterms
There are two contracts:
Dem
GOP
You can Buy 'NO' on the Dem contract for 31c.
You can Buy 'NO' on the GOP contract for 66c.
What if I bought both contracts?
31 + 66 = 97 cents.
Shouldn't one of the contracts (at least one of them) settle to a 'No'?
Thus, would I not be receiving $1 for sure?
Maybe I am not understanding the mechanics, or there are additional considerations that I don't know.
Thank you in advance.
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