Wednesday, October 04, 2006

Trading Security Futures on Tradesports?

Question for you financial dudes, does anyone trade futures contracts on specific companies' stock prices on Tradesports? I see there are contracts there for the major indices, but what about a specific company? I wonder if betting on a stock price through something like Tradesports might be a simpler way to day trade on a small scale. Just put out a contract for some company's stock to be at some price by the end of the week, but you could bet smaller amounts of money on it than if you were actually buying a real share or derivative. Would this work, or is there a reason why it wouldn't be feasible?

(I suppose one reason could be the new law banning internet gambling. It would be interesting legally if you created a predictive market that focused exclusively on securities that were traded in the standard markets. Would it still be possible to demonize such a market as illegal gambling when there is a perfectly legal and economically necessary market that does exactly the same thing?)

2 Comments:

At 8:59 PM, Anonymous Anonymous said...

there are a few regulatory issues with trading single stock futures over the internet (on top of any internet gambling rules)...i'm certainly not an expert, and any explanation would be boring, but briefly...

you could classify such trading as an offer and/or sale of stock (which is a technical term that i again don't fully get). as such, tradesports would have to become a liscensed broker, or potentially a liscensec broker/dealer.

as to your point of being able to trade in small size, with the low-cost internet brokerages, you can legitimately trade stock in much smaller quantities than 5 years ago...if you are paying $10 a trade, you could legitimately play w/ transaction size as small as 1-2k and not get killed unless you were moving in and out quickly.

for sizes less than that, the transaction cost on tradesports again comes into play...bid offer on tradesports is small for "low-liquidity" stuff like sports betting where there is usually a huge spread...but compared to the stock market it is still pretty wide.

 
At 11:37 AM, Blogger Thomas said...

ya what he said

 

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