In total 57 contracts were shorted for really low prices at an average of 49.41%. Not a giant amount of volume considering there have been 11,800 contracts sold with regards to Obama-Care. It also appears that the market has recovered to previous trading levels in the 60's. Last night's price dip may have been due to a couple of different reasons.
1.) A new trader shorted contracts for low prices because he was too impatient to wait for other traders to put up better bids.
2.) A trader misinterpreted a news article fresh off the press, thought the fundamental value of the Obama-Care contract was much lower than it was and in order to make a good profit he thought he must short every contract he could before everyone else. (I've been guilty of doing this myself.)
3.) A trader who was previously going long on the Obama-Care contract before when the price was steady and cheap at around 30% wanted to liquidate his position immediately. Even though he could sell for higher prices, he is still making a profit from his original position.
If last night's trades were part of some "Market Manipulation" then it clearly didn't work very well because the price returned to stable levels by 6:02AM. Less than four hours after the huge dip in prices.
I think most of the commentary on this doesn't distinguish between manipulation and dumbassery.
ReplyDeleteNot to mention that a lot of commentary seems to be coming from people who have never made a single trade.
ReplyDeleteJason Ruspini is VP at a hedge fund, and trades daily much more than what you will trade over your entire life, guys. See his commentary at MO:
ReplyDeletemidasoracle.org/2010/03/17/obamacare-prediction-market-was-briefly-manipulated-yesterday-evening-so-it-would-artificially-close-at-35-chart/#comments
I have a long life ahead of me.
ReplyDeleteWhich means you have had a short life experience, if you look at things the other way. :-D
ReplyDelete