What are the odds?

A collage of current events.

'What are the odds of ______?' It is often difficult to get a straight answer to this simple question. Sometimes a person simply wants to know the odds of what will happen as apposed to reading opinions of what should happen.

For quite some time I have been looking to intrade.com for answers and enjoy watching an open market make predictions. If you want a simple honest opinion about how a future event will turn out - look to a group of people who put their money where their mouth is. 'Unbiased' news reports may attempt to fairly represent all viewpoints with 'equal time' while also addressing what should happen. But, if a fast honest opinion about what will happen is what you really want, markets like intrade.com is your solution.

Generally speaking, if a contract is liquid and has a tight spread, a trading price of 57.0, for example, implies market participants are predicting, with a 57% chance of certainty, that the specified event will occur. Here are a few contracts that caught my eye this morning and have also been in the news recently. The charts are 'live' (continually updated):

"The Republicans to control the House of Representatives after 2010 Congressional Elections "

Price for 2010 US House of Representatives Control at intrade.com
Republican elephant symbol

"US moratorium on deep sea drilling will be lifted before midnight ET 31 Dec 2010 "

Price for US moratorium on deep sea drilling to be lifted at intrade.com
deep sea drilling rig

"A Cat 3 (or higher) storm to make landfall in the US during 2010 Atlantic Hurricane Season"

Price for Cat 3 storm landfall in US during 2010 Atlantic Hurricane Season (1 Jun - 30 Nov) at intrade.com
satellite view of hurricane

"USA and/or Israel to execute an overt Air Strike against Iran by 31 Dec "

Price for US/Israeli Overt Air Strike against Iran at intrade.com
Iran Flag

"California marijuana legalization initiative to be passed in Nov 2010 ballot"

Price for 2010 California marijuana legalization initiative at intrade.com
marijuana plant

Intrade.com's prediction markets are essentially a futures market. Contracts are bought and sold by traders. These contracts reach a target value of 100 or become worthless at an expiration date depending on the outcome of the specified event.