Double Blind

The positions in my account are slowly dwindling. Right now I only have two Bird Flu contracts and a very minor position for the next Canadian election.

Presently I am risking $1214 for a potential reward of $2076 if Asian H5N1 Bird Flu does not strike the USA by December 31, 2006. (Update: This has expired; my short position of 330 contracts expired at zero and I cashed this in; open interest was 1232… meaning I was about 27% of the whole market at expiration). The bulk of this bet was made back in March and April. There is also another bet that the Bird Flu will not strike the USA by March 31, 2007. This I am risking $719 for a potential reward of $640 if it does not hit. The bulk of this bet was made in June and August, which is why I received significantly worse odds.

I am currently risking less than $5 on the next Canadian election. This will change as the election comes closer and the markets become less efficient.

I have been trying to find a place to park my idle online cash (time-expiration contracts are excellent for this) but I have not had much luck other than a 4% GIC; the liquidity and risk profile of the other expiration contracts are too extreme to be properly traded. The Bird Flu has been good to me – the cash I have “parked” in that contract will yield roughly 150% on an annualized basis. I would love to invest the proceeds into something similar, but I doubt I will be able to find such inefficiently priced contracts in the near future.

I have been forced to look at other venues for more exotic type bets, but I have been unable to find anything that is not related to sports.

This entry was posted on Sunday, December 31st, 2006 and is filed under Commentary. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.