Thursday, October 18, 2012

Arbitraging the Political Futures Markets

A nice post by Paul Solman, economics reporter for the PBS NewsHour, and all-around good human being, on how to arbitrage the political futures markets.

One thing I really like are the warnings at the top of the piece from Doug Dachille. Dachille used to trade for JP Morgan. He does a good job of laying out the risks that arbitrage of this kind entails, such as basis risk and counterparty risk. One might decide to run these knowingly, but they cannot be ignored. There is much of intellectual interest here, but, being of like mind with Dachille here, I present this as a window into an interesting market rather than as a recommendation for a trade.