Romney comes back, but Obama still favored by IEM
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Mitt Romney has been making a comeback on the Iowa Electronic Markets (IEM) in recent weeks, but Barack Obama is still a 2-to-1 favorite to win the popular vote in November.
A contract for Mitt Romney was selling for 34.5 cents on the IEM’s Winner Take All market Thursday morning, which means traders believe there is a 34.5 percent probability that he will win. That price is up substantially from the 18.6 cents he was trading at as recently as September 27, an 85 percent increase in price.
Obama, meanwhile, was selling for 66 cents Thursday, which means traders believe there is a 66 percent probability he will win the popular vote. As Romney’s price increased in recent weeks, Obama’s fell 19 percent from his high of 81.7 cents on Sept. 27.
Most of Romney’s recent gains came during a two-week period shortly before and after the first debate on Oct. 3. His price reached as high as 39.2 cents on Oct. 12 before settling back.
Meanwhile, on the Vote Share market, in which traders buy and sell contracts based on what percentage of the two party vote they think each candidate will receive, Obama was selling for 53.9 cents Thursday morning. That means traders believe Obama will receive 53.9 percent of the popular vote between the two candidates.
Romney was selling for 47.4 cents Thursday morning on the Vote Share market.
On the Congressional Control market, traders believe the most likely outcome is the status quo, with a Republican-controlled House and a Democratic Senate. That contract was selling for 68.5 cents Thursday morning.
A contract for a GOP sweep was selling for 18.2 cents, a Democratic sweep for 4.5 cents, and a Democratic House and Republican Senate for less than 1 cent.
The contract for “Other,” which represents a situation in which neither party controls one or both chambers of Congress, was trading for 8.4 cents.
A real money futures market operated by the University of Iowa’s Tippie College of Business tippie.uiowa.edu the IEM gives traders the opportunity to buy and sell contracts based on what they think the outcome of a future event will be. Traders can invest up to $500 in the market.
The latest general election market prices are available at iemweb.biz.uiowa.edu/quotes/Pres12_quotes.html. More information on the IEM—including information on opening a trading account—is available tippie.uiowa.edu/iem/markets/.