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Mechanics of buying a 'No' contract
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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.
There appears to also be a hidden third option if a tie occurs due to a representative that is an independent or doesn't caucus with the two parties.
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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