McCain, Clinton Take Commanding Leads on Iowa Electronic Markets
The price of a McCain contract was trading at 78 cents at 9 a.m. CST Wednesday, meaning investors on the IEM believe there is a 78 percent probability that he will be the Republican nominee. His price had reached 83 cents earlier in the morning before profit-takers brought the price back.
Mitt Romney was in second place on the IEM after his second-place finish in Florida, with his contract trading at 15.6 cents.
Trading was extremely heavy on the Republican market Tuesday with 39,700 contracts trading hands. Most of that was due to a massive sell-off of Rudy Giuliani contracts, as 21,700 traded hands as his contract price fell from 5.2 cents at the start of the day to virtually zero.
The former New York City mayor had banked his campaign on winning Florida while ignoring the primaries and caucuses in earlier states, but he came in a distant third place in the state. Although he led the Republican nomination market from mid-June to early December, Giuliani's contract value drifted further downward as the nomination season began before it collapsed in the days leading up to Florida.
By Tuesday evening, it was trading at .04 cents even before it was reported he would drop out of the race. By contrast, a contract for Fred Thompson, who quit the race more than a week ago, was still trading at .03 cents.
Other Republican candidate contracts include Mike Huckabee at 1.3 cents and Rest of Field at 1.1 cents.
On the Democratic market, Clinton still held a commanding lead despite coming in second place in last weekend's South Carolina primary. As of 9 a.m. CST Wednesday, her contract was trading at 62.4 cents, meaning that the market believes there is a 62.4 percent probability that she will be the Democratic Party's nominee.
Barack Obama is still in second at 38.4 cents. John Edwards' contract had fallen to less than 1 cent amid reports he will end his campaign today.
The Democratic Rest of Field contract was also trading at less than 1 cent.
The IEM markets will pay off when the two parties officially name their presidential nominees at their respective conventions this summer. The markets do not attempt to predict the winners of the primary elections or caucuses in individual states.
The Iowa Electronic Markets is operated by the University of Iowa's Tippie College of Business as a real-money futures prediction market. Begun in 1988, the IEM is a research and teaching tool that has achieved an impressive prediction record, substantially superior to alternative mechanisms such as opinion polls. Such markets have been significantly more accurate than traditional tools in predicting outcomes ranging from political election results to movie box office receipts.
The IEM can be found online at tippie.uiowa.edu/iem. Nominating market prices can be found at iemweb.biz.uiowa.edu/quotes/Nomination08_Quotes.html.
Contact: Tom Snee, UI News Services, 319-384-0010