Electoral markets: information rich, limited hedging possibilities

New Angles

This year’s US presidential election race has been one of the most heavily wagered on in recent years. InTrade, a leading Dublin-based political futures trading website, told Risk that the average daily volume for political wagers last month was 30,000 – a 30% increase on the previous month. Daily volumes for futures contracts on the US electoral vote exceeded 20,000 several times.

“Though the market is currently too small to hedge a stock portfolio of meaningful size, major fund managers ha