Given that I think Sen. Amy Klobuchar (D-MN) is most likely to be selected as Joe Bidenâ€™s running mate, I am buying up shares of Klobuchar winning the presidency at 1%.
There is a chance that these shares will simply go to 0. This could happen if Klobuchar dies and/or becomes incapacitated. It might also become hard to unload 1% shares if Biden picks someone other than Klobuchar. Even in this scenario though, opportunities might arise to sell off the shares if the markets suspect for any reason that the original ticket will not stay intact through November.
I like this trade, overall, because there are a number of scenarios that could happen anytime between now and November in which these shares lead to high returns. You can also use a modified version of this tactic to chase high returns for many of the VP candidates who are co-listed in Predict’s Democratic Nomination market.
Here is why I like it most for Amy Klobuchar:
(1) The Market Decides Klobuchar is the Front-Runner for the Democratic Nomination for Vice President
So far, the markets generally regard California Senator Kamala Harris (D-CA) as the front-runner for Vice President. If some kind of news causes a flip and Klobuchar becomes the market leader, itâ€™s possible that Klobuchar shares in the presidential market will go to 2 percent or higher.
This isn’t inevitableâ€”Harris shares in the president market are still trading at 1%. But it will become more likely as the markets conclude that other candidates are out of contention.
(2) Biden Selects Klobuchar As His Running Mate
The worst case in this scenario is that the 1 percent shares donâ€™t move at all, and you can simply sell them off for no profit or loss. But thereâ€™s also a chance that theyâ€™ll spike and remain above 1 percent. The fact that Mike Pence shares are trading around 3% and have gone higher during periods of controversy for Trump provides at least a rough baseline of what might happen to Klobuchar shares.
(3) Biden Selects Klobuchar and Then Rumors Spread that Biden Will Withdraw as the Democratic Nominee
Pretty much any negative news about Biden could cause the Klobuchar shares to spikeâ€”scandal, illness, etc.
(4) Biden Selects Klobuchar and then Dies or Becomes Incapacitated
Iâ€™m assuming in this scenario that Klobuchar shares would immediately spike on the assumption that she would replace Biden as the nominee.
(5) Klobuchar Becomes the Democratic Nominee
Shares would rise to somewhere around the generic odds of a Democratic winning the presidencyâ€”probably around 50 percent.
(6) Klobuchar Becomes President
While unlikely, I am hard-pressed to think of any other time that PredictIt has offered an opportunity to buy 1 cent shares that could very well close at $1. If you’re on the fence, consider the bragging rights that come with executing a perfect trade.
Keendawg, Zoltar, and I discuss this issue in more detail on our recent podcast, which you can find here.
Pratik Chougule is a podcaster and blogger at Star Spangled Gamblers. Follow him on Twitter @pjchougule.