Swine Flu

I have not been involved in the Swine Flu contracts in a while because I wasn't keeping up with all the updates, but I recently saw a forum post which got my attention and I decided to do a little analysis. Below is the post that user "Howard" wrote in the Intrade forums quoted for all of you. The part in quotations is another person's post that he is replying to.

"diseases tend to spread faster than linearly, which would indicate the next increase is going to be significantly greater than 3,600. b) Even if the increase only barely matched last week’s … total would still be more than 25,000."

Tend to spread faster than linearly? Really? Even after the spread has peaked? The last 4 Friday totals are: 8500, 13,217, 17,855, and 21,449. Those increases are: 4717, 4638, and 3594. The rate is SLOWING. If the trend continues, we will be adding approximately 3200 new cases by this Friday. The new AND FINAL total would thus be approx 24,650. Good luck buying those 73s!

I decided to take a look at the numbers myself and even though he was right about the last three Friday updates. He was incorrect about the amount of cases on May 29, which he says was 8,500 but was 8,975. You can check past official Swine Flu updates for yourself here.

Below is the date of every friday update and I have put the number of cases and the percentage it increased from the last friday update.

4/24/09 - 7 Cases
5/01/09 - 149 Cases - 1,914% Increase
5/08/09 - 1,639 Cases - 1,062% Increase
5/15/09 - 4,017 Cases - 145% Increase
5/22/09 - 6,552 Cases - 63.1% Increase
5/29/09 - 8,975 Cases - 36.98% Increase
6/05/09 - 13,217 Cases - 47.2% Increase
6/12/09 - 17,855 Cases - 35.09% Increase
6/19/09 - 21,449 Cases - 20.13% Increase
6/26/09 - 24,571 Cases - 14.5% Increase (Projection)

As you can see, the percentage increase has decreased quite steadily for every friday update except the 6/5/09 update. I figure that the best way to anticipate how the next update will go, will depend on how much the percentage increase, decreases or increases. For the last 5 updates, the percentage increase has gone down on average by 27.1%. That gives us an expected percentage increase of 14.5% for the last update before expiry and that puts the expected total number of cases at 24,571 with 3,122 new cases.

Because of that, I am giving the SWINE.FLU.US.JUN09.25000+ contract a Sell recommendation and I have Sold 10 Contracts at 76. The only reason I don't like selling this contract more is because we only need to see a higher then 16.55% increase in cases to see more then 25,000 cases and that would still make it the lowest percentage increase for a friday in the history of these Swine Flu Contracts. But as you can see the percentage increase has decreased almost every single time and I would rather bet with the trend then against it. For a price of 76 I think selling this contract is a good deal.