The latest prediction market assessment

In a blog post last week entitled “Prediction markets’ take on removal of POTUS from office“, I wrote about the PredictIt.org prediction market, where one could purchase a “share” which pays $1 if the answer to the question, “Will the Senate convict Donald Trump in his first term?, turns out to be “yes”.  Since the price of that share at that time was 8 cents, this meant that investors at the time were placing an 8% probability that POTUS would be removed from office as a consequence of the Senate trial.

Since last week, the daily closing prices of the share price have  fluctuated between a high of 11 cents (on 1/27 and 1/28) and a low of 4 cents (on 1/30); see the graph below:

It will be interesting to see how the share price changes going forward.  Given the political composition of the US Senate, it is not surprising that the odds of conviction are as low as they are, but expect more share price volatility as this political drama plays out.  After all, the only two possibilities are for the share price to go to either $0 or $1.

 

 

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