Intrade represents a type of stock market which trades in predictions regarding outcomes of future events. If you believe that Sarah Palin will be the Republican nominee in 2012, you can purchase a "contract" for the prevailing price, currently 25.8. Romney is currently 26.0. This price is determined by the contact traders themselves (anyone can buy or sell) and can be considered a form of ongoing poll. In fact, this speculative trading on events has been considered for use by the Pentagon as it is a highly reliable predictor of future events.For example, if you purchased a contract on Sarah Palin today at 26.8 ($2.68), and she in fact becomes the Republican nominee for President, the contract immediately closes at 100, and the value goes to $10.00. You would therefore earn $7.32 for each contract purchased. If she chooses not to run, or runs and does not become the nominee, the contract closes at 0, and you will have lost $2.68 per contract purchased.
The bottom line is that there are thousands of people who are speculating in this market, and the market is predicting that both Sarah Palin and Mitt Romney are equally likely to be the Republican nominee. What is interesting is the fact that until Friday, Sarah had been trailing by 2 to 4 points for months.
Note how Sarah's stock rises and falls with significant events. I was surprised that her "price" hasn't fallen with the Gulf oil spill because of her outspoken support of offshore drilling.
William of New York:
