After nine months of betting, my full election bets portfolio page is getting ever harder to keep track of, so here’s some simpler profit and loss figures for the Republican Nominee and Next President markets, along with some thoughts about next steps.
First, a new position, taking 8 units profit out of my earlier position on Paul Ryan at 400.0. Originally, a 2 units stake yielded 800 units return. Now after laying 10 units at 22 last night, the Speaker earns me a minimum 8 units profit, with an extra 580 if he becomes the nominee.
I must stress, this is not my advice for anyone starting or thinking of amending a Ryan position from shorter odds. I have a classic gambler’s dilemma. His odds are shortening fast, and I suspect will go further if, as expected, the contested convention becomes likelier. But having got it right when backing him at 400, it would be unprofessional not to bank at least some profit.
First, to explain the John Kasich position. If he were to become the nominee, I’d lose 239 units. To cover it, I’d then look to lay some or all of that in the Next President market, for which he yields 742 units profit. Potentially that equation might mean a loss – if his odds were above [3.0] – but I reckon they’d be much less.
In any case, were the process to go far enough to give Kasich a chance, cover opportunities would likely arise on the others to improve the maths. For example by the time of a second ballot, I’d expect to have taken some profit out of Cruz.
As for his chances, my instinct is that it will be very hard to legitimise Kasich being the candidate having finished third – arguably less than a unity figure like Paul Ryan.
Certainly less than Cruz, whom it is perfectly realistic to imagine delegates swinging behind, and would be harder to dismiss as a tool of the establishment. Predicting how a brokered convention plays out will be complicated but for my money, if Trump is indeed to be stopped, Cruz becomes the clear favourite.
Two other eventualities could affect my ability to generate an overall profit. Donald Trump becoming President – a position I’m happy to be against and have no intention on covering.
Or somebody other than Trump, Cruz, Kasich or Ryan becoming the nominee after a brokered convention. Again this outcome can be covered against later if necessary, during what will be a lengthy, complicated process. Right now, the shortest odds about anybody besides those four is 100.
Obviously, the key to it all is my big positions on Cruz and Ryan. With Cruz looking strong in Wisconsin and Trump drifting in the market as his chance of winning a majority of delegates diminishes, his odds could tighten further in the short-term.
Ultimately, when we get to the convention Cruz and Trump will have three quarters of the delegates. If the general sentiment is that the party are able to block Trump on the first ballot, Cruz could even take over as favourite.
Again, this presents a dilemma. The target I had in mind earlier to lay back was around 5, and he’s just passed it. Laying right now seems premature, though, given Trump’s troubles in Wisconsin. Therefore, I’m at least waiting for that.