Elephant Ears

This blog is dedicated to the political happenings in the Valley and Southwest Virginia. As the the name implies, this blog will have posts based on what is heard by this elephant's (GOPer's) ears. It is also a great treat to get while at the county fair or a carnival.

Wednesday, October 18, 2006

Hedging Elections

Since I am a Finance major, I thought of this a few days ago.

Many people give money to candidates with the hope that person will win. Some people do this in the hopes of getting a job, having a friend in office or whatever else they give for. I was thinking, what if you hedged your political donations?

My theory is that you give money to your candidate, and then bet on the other candidate to win.
For instance, if you give George Allen $100, you would then buy 10 contracts/shares on Tradesports for about $37. So if Webb wins, you would get your $100 back; and if Allen wins, your money will still count anyway.

Just wondering what everyone thought of this.

UPDATE: You actually need to buy 16 contracts for $59.20 (16*$3.70) to hedge this position. This would yield you $160 for a Webb win - the $59.20 premium = $100.

4 Comments:

Post a Comment

<< Home