Arbitrage Concept

If one were to look at the probabilities for the Democratic nomination, they should correspond very closely to the probabilities for the winner of the California Democratic primary on Feb. 5. I should look into this further. Basically, the reality would seem to me that whoever of Clinton or Obama wins statewide in CA should end up getting the nod.

But what if there are gaps--e.g., if the trading-based probability for Clinton winning in CA are much higher than for her winning the nomination--what should one do? I'll have to talk to my horse trader friends on this one, but I would think that the information on the overall race would be more inclusive of all the information, let's say of the impact on its outcome of the upcoming NH and SC races, than the CA odds itself would show. So, when the two diverge, one should bet on the CA race odds moving in the direction the overall outcome has taken.

Following my motto, "Putting my Money Where My Blog Is--Not", I was able to register with Rasmussen Markets. I made the following offers: bid 50.1% on Obama winning CA (vs. a current trade value of 55% on Obama winning the nomination!--last trade on CA was at 70%, but the next highest bid was at 49.9%, so I'm trying to get it cheap, below 55%), bid 2.3% on Hillary being nominated as VP (a sneaking suspicion I have), bid 24.2% on Ron Paul running as an independent (a buy up to about 40%, I'd say), bid 57% on the Dems winning NM's Senate contest, and finally, a bid at 88.5% on the Dems holding the Senate (now trading at 92; so if the price goes down for any reason I'll go in). It's just for fun.