January 11, 2012 | By UI News Services
Prices are mostly stable on the Iowa Electronic Markets after Mitt Romney's convincing but unsurprising victory in New Hampshire Tuesday, with traders giving a sizable edge to Romney capturing the GOP nomination and a slight edge to President Barack Obama's reelection.
As of 8 a.m. Central Standard Time Tuesday, Romney's contract was selling for 83.5 cents on the Republican nomination market, the exact same price it sold for Tuesday morning as the polls opened in New Hampshire. The price means that traders believe Romney has an 83.5 percent probability of being the Republican nominee.
Other prices on the market include: Newt Gingrich at 6 cents, up from 4 cents Tuesday morning; Ron Paul at 2.5 cents, up from 2.2 cents Tuesday; and Rick Perry at 1.1 cents, up from .8 cents on Tuesday.
The Rest of Field contract, which covers any candidate for whom no individual contract has been issued, including Rick Santorum and Jon Huntsman, was selling for 5.6 cents Wednesday. That price is down more than 5 cents from the 10.8 cents it was selling for as the Granite State polls opened.
Meanwhile, on the IEM's presidential election market, Obama's contract was selling for 56.5 cents Wednesday morning, which means traders believe he has a 56.5 percent probability of re-election. His contract has been trading in the 55 to 58 cent range since Dec. 9.
The Republican contract on the presidential election market was selling for 43.3 cents.
A real money futures market operated by the University of Iowa's Tippie College of Business, the IEM gives traders the opportunity to buy and sell contracts based on what they think the outcome of a future event will be. Contracts for the correct outcome pay off at $1, all other contracts pay off at zero. As a result, the price of the contract at any given time is the probability that the traders believe that event will happen. Traders can invest up to $500 in the market.
Contact: Tom Snee, UI News Services, 319-384-0010