The prices of the two contracts -- and therefore the relative probabilities that each candidate will win, as assessed by the market -- are converging. The media's opinions -- read educated spin -- are giving way to market participants' experiences of the candidates, their platforms, and the implications of the policies they would enact if elected. When I started drafting this piece a few days ago, what I said was: "My prediction, based purely on instinct and a coin flip, is the McCain will edge closer to the 50% line as the weeks pass. Bottom line: I think this contract is undervalued, resulting in a long-selling opportunity that is greater than the trading fee, at least as of today". Oh well. I guess the market outpaced me.
What is particularly interesting is the performance of the markets over the past week. I haven't actually examined those charts with any scrutiny yet, but if I had to make an educated guess, (and I do), it's that Obama will have slipped a couple of points after some gaffes he made that have riled the Repiblican party, and women in general, at least according to the media. Something about comparing Palin to a pig, though I don't follow these things closely...
Fancy that, right again! I amaze myself sometimes. Though I dare say that anyone should have been able to see that a selling price of 32/100 for McCain was substantially undervalued, unless he was giving undue weight to say the probability that McCain would have to drop out due to health issues (let's face it -- he is pretty old). I predict Obama won't climb more than approximately five points over McCain for the foreseeable future, assuming that no one in the McCain camp makes a political faux pas.
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