According to the online website Intrade.com, the Conservative party should win a minority in the Canadian federal election on Tuesday, 14 October 2008. For those who are unfamiliar with Intrade.com, it is a website where you can place bets on outcomes on wide range of different events. For the upcoming election, Intrade.com provides the following data:
- Conservatives winning: Bid/Ask 90.5/94;
- Liberals winning: Bid/Ask 6/11; and
- Another party winning: 0/1.
Note, this data changes constantly, so when you check, there might be different values.
This information means that if you believe that the Conservatives will win, you can buy a contract for $94 and if you are correct, collect $100 after the election, for a total profit of $6.00. If you are wrong, you forfeit your $94.00. If you believe that the conservatives will not win, you can short the Conservatives. If you are correct, you get to keep $90.50. If you are wrong, you will have to pay $9.50 to make $100. This simply explanation excludes transaction costs. In essence, after the election the Conservative contract is worth is $0.00 or $100.00. Your contract (or stock, if you like) with be worth either of those two values.
Like a stock, the Conservative contract value can and does change over time. You can see the graphs where Intrade shows you the historical prices. So you do not need to wait until the election is over. Rather, you can buy or sell your contract at any time until the election is decided, at which time the value of either $0.00 or $100.00.
Intrade.com also provides the following data a minority government:
- Minority government: Bid/Ask 89.5/91.9.
If we put the two groups of data together, we conclude that the betting consensus is that Conservatives win with a minority government.
Of course, the American election is also covered on Intrade.com.
My photograph of Jasper National Park is hosted at Flickr. If you click on the picture, you will be taken to my Flickr account where you can see more pictures.
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