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I’ve been following the Harriet Miers futures at Tradesports. They have two contracts on Ms. Miers becoming a Supreme Court justice. One is simply whether or not she’ll be confirmed; the other is how many votes she’ll get.

I noticed an odd discrepancy. The contract to confirm dropped far below the contract that she’ll get 50 or more votes. An arbitrage opportunity? I pointed this out to Donald Luskin at The Conspiracy to Keep You Poor and Stupid. He said that the vote total contract is only if there's a Senate vote. Then we hit on the fact that there’s an implied withdrawl contract within these two contracts. Since the vote-to-confirm contract has fallen to 30, and the 50-or-more-votes contract is at 68, the withdrawl contract would be: 1-(.30/.68) or 55.8%.

I’ve downloaded the historical data, and the withdrawl contract had been around 15%-20% for most of this week, but it only became Google-like in the past 24 hours.

Posted by edelfenbein at October 22, 2005 2:01 PM