Editor's Comment: Note that other companies may provide similar political markets.
Politics Analysis & News
Date
Trading Update
08-Jun-17
[12:30pm]
Election Day: Time to Pick the Best of a Bad Bunch
Just had a chat with the Financial Spreads dealing desk, they will be running their election markets until midday tomorrow.
They are also taking big bets with clients on for +£100/seat... that puts my £5/seat bet to shame.
Although, note that they are now only taking trades over the phone.
Exit Polls at 10pm Tonight
Ipsos MORI plans to publish its exit poll at 10pm, the poll covers 20,000 people in +100 constituencies.
It's certainly not 100% accurate but there could be a healthy move in the FTSE 100, EUR/GBP and GBP/USD (and election markets) as the poll is announced.
Election Markets Open Until Midday 9 June?
Apparently so.
Although, as the results become clearer, the market will settle down and the width of the spreads could easily cover the result... i.e. you'll lose whether you buy or sell
90 Seat Conservative Majority?
With 650 seats in parliament and the current market at 370 Conservative seats that suggests Mrs May will end up with a healthy 90 seat majority.
Seems toppy.
If 90 seats is indeed realistic, just imagine what her majority would have been with a well run campaign...
Prices as of 12.30pm, 8 June 2017:
Update by Jacob Wood, Editor,
07-Jun-17
[5:30pm]
Conservatives Up 10 Seats Since Yesterday
The seats markets for the Conservative party and Labour party remain fluid.
The Tories are up 10 seats on yesterday's quote, i.e. they've climbed to 371 - 375 from 361 - 365.
Labour have dropped to 195.5 -199.5 from 202 - 206
The SNP seats quote has barely moved for the last month.
There's little love for the Lib Dems although I've just had a small buy of their seats @ 12.
They currently have 9 MPs and so I think the downside is limited... although judging by Tim Farron's election campaign... the upside is looking pretty limited too. I could well lose on the width of the spread.
Financial Spreads as of 5.30pm, 7 June 2017:
Update by Jacob Wood, Editor,
06-Jun-17
[6:18pm]
Spread Betting Arbitrage Opportunity
These are rare and looks like the firms are evening up their books.
As of 6.10pm:
Arbitrage 1) Labour Seats Arb
Buy Labour seats @ 203.5 with Financial Spreads Sell Labour seats @ 208 with IG
= 4.5pt Arb
Arbitrage 2) Conservative Seats Arb
Buy Conservative seats @ 361 with IG Sell Conservative seats @ 365 with Financial Spreads
= 4pt Arb
Update by Jacob Wood, Editor,
06-Jun-17
[1:30pm]
The Highest Seats Quote Yet for Labour
Labour Seats are currently trading at 202 to 206, a little off their earlier highs of 205 to 209.
There's still no respite for the Tories or Lib Dems. Neither party seems to be getting much love (see prices below).
More Activity in the Political Spread Betting Markets
A few weeks ago, the prices might only change about once a day... if you look at the hourly charts now, you'll see more frequent price moves.
That would suggest that these markets are seeing more trades (and they're no longer just a PR market for the spread betting companies).
General Election Price Update
Financial Spreads: 1.45pm, 6 June 2017:
Update by Jacob Wood, Editor,
05-Jun-17
[12:18pm]
Election Market Update
Firstly, and putting all the nonsense of punting on election markets to once side, after another shocking attack in London on Saturday, our sincere condolences to all those who have lost loved ones, been hurt other or are otherwise suffering.
Conservatives Improve
It's sombre morning here in the office but here's a quick price update from Financial Spreads, Sporting Index and Spreadex - see screenshots below from 11.30am, 5 Jun.
The Conservative party, who are normally the 'law and order party', have gone up 7 seats from Friday's quote of 363 - 367 seats to 370 - 364.
In the seesaw between the two main parties, Labour has lost most of those seats dropping 199 - 203 to 194.5 - 198.5.
Caution: Wide Spreads
As usual with election betting, watch out for the wide spreads - Sporting Index and Spreadex are still offering markets with a 6 point spread on the main parties.
Financial Spreads are more reasonable with a 4 point spread but that's still not that tight.
Update by Jacob Wood, Editor,
01-Jun-17
[4:22pm]
Big Bets Against Labour Party Seats
FinancialSpreads.com have said they've got some big trades against Labour including one client who's shorted Labour seats at 175 for a cheeky £500/seat.
I.e. their client will lose £500 for every seat that Labour gets above 175 and vice versa... they'll win £500 for every seat under 175.
E.g. if Labour get today's estimate of 201 seats, the person will lose = (201 - 175) x £500 = 26 seats x £500/seat = £13,000 loss.
E.g. if Labour get the 5 May estimate of 154, the person be down the pub after winning = (175 - 154) x £500 = 21 seats x £500/seat = £10,500 profit.
That's a pretty big bet.
The firm's max political bet size is actually £500/seat ... but you can also bet a more reasonable £1/seat. (You'll also get £1/seat with the other firms offering this market).
Update by Jacob Wood, Editor,
01-Jun-17
[2:22pm]
Election Classic
Jeremy Corbyn is doing an election classic. He's promising the earth and the younger members of the electorate are lapping it up.
E.g. a simple Labour manifesto pledge
"We will start by bringing our railways back into public ownership
Labour will invest in a modern, integrated, accessible and sustainable transport system that is reliable and affordable.
That's all well and good but he seems to be forgetting that the trains were poor when they were run by the Government in the past... and the tax payer picked some very large bills in order to subsidise that poor service.
That's a problem for another day though... and at the moment the Labour party seems to have a new energy.
Impressive Labour Rebound
The Labour seats market has moved up by an impressive 50 seats.
I.e. from a low around 150 - 154 seats to the current spread of 199 - 203 seats.
Spread Betting General Election Price Update
Financial Spreads: 1.45m, 1 June 2017:
Update by Jacob Wood, Editor,
19-May-17
[4:24pm]
Lib Dem Spread Betting Market Just Collapses
As the chart below testifies, the Lib Dem market is in freefall.
On 25 April they were forecast to get 29 - 31 seats, up from the 9 seats they currently have.
Prior to yesterday's TV debate, the spread had already crashed to 15 - 17 seats.
And now they've lost another 2 seats. That's careless.
UKIP Steady at Zero Seats
The market for UKIP seats market is holding steady around the 0.01 - 0.3 level.
I.e. the price suggests that Paul Nuttall's motley crew won't be getting any seats in the House of Commons this time around.
Who say's the electorate is stupid?
Update by Jacob Wood, Editor,
19-May-17
[3:21pm]
Small Bounce Back for Jezza
Jeremy Corbyn's party is reaping the rewards of the Lib Dem collapse (or helping to cause it).
On 11 May Labour were trading at 150 - 154 (see story below).
It looks like his retro-manifesto has gone down well with the party faithful and many of the younger potential voters (who weren't alive in the '70s and don't realise top rate income tax hit a lose-lose 83%).
The Labour party seats market has now moved 20 seats higher to 170 - 174.
Their manifesto has some well intentioned ideas but it proves again that Jeremy Corbyn is as ill-suited to office as Donald Trump. Luckily, Corbyn's also as unelectable as Kinnock.
It's a shame the Labour party don't have a more Blairite candidate who can keep the Tory party in check.
UK Spread Betting Market Price Update
Financial Spreads: 3pm, 19 May 2017:
Update by Jacob Wood, Editor,
12-May-17
[10:34am]
UK Election 2017 Price Update:
Below prices from Financial Spreads and IG.
There's been no discernable change in the prices despite the Labour Party draft manifesto leak.
Perhaps that says a lot about the current perception of the Labour party.
[10:33am] Important Note re: IG's Conservative Majority Market
IG's current price of 91 - 97 looks too good to be true.
For me, it's an easy buy @ 97...
But... on closer inspection, i.e. reading the market information, you will see the IG Conservative Majority market is not a "seats" market.
It's basically a binary market. It will be either close at 0 if the Conservative's don't get a majority or 100 if they do get a majority.
As always, if something looks too good to be true with a market, re-check what you think you are trading.
Still Tempted?
If you buy at 97 the maximum you can win is 3x your stake (100-97=3).
That might still be tempting but note that you would lose 97 x your stake if the Tories don't get a majority.
That's a very nasty downside.
Update by Jacob Wood, Editor,
11-May-17
[4:21pm]
2017 vs 2015 Election Market Nightmare for Labour
Jeremy Corbyn may have said "I think we can spend too much time worrying about polls" but he's got to be a little concerned.
If he doesn't want to look at the polls then he certainly won't want to look at the spread betting markets.
It's interesting to look back at the 2015 'seats' markets when "Red Ed" was considered "unelectable" but you also had UKIP eating into much of the Conservative heartland.
A typical pre-election Conservative seats quote floated around the 280 - 286 level and a Labour party seats market would hover around 275 - 281.
The two main parties were pretty much even in the spread betting markets.
Labour is now about 250 seats behind:
General Election Seats
2015 Election (Typical Spread)
2017 Election (Typical Spread)
Conservative Seats
280 - 286
398-402
Labour Seats
275 - 281
150-154
Jezza might want to keep his head in the sand for a little longer.
Update by Jacob Wood, Editor,
10-May-17
[3:21pm]
Good Political Betting Blogs
There are two different blogs that are worth looking at:
As we head towards the last UK budget before the general election, Alastair McCaig from IG discusses the trading options available for those looking to take a position.
One new binary market asks whether Alex Salmond will be part of the next cabinet, whilst another considers whether there will be a second general election in 2015.
Update by Alastair McCaig, Market Analyst,
10-Mar-15
[12:42pm]
How to Trade on FX Ahead of the UK General Election
In the run up to the election, IG asks Stephen Gallo, from BMO Capital Markets, about what elements to consider when attempting to capitalise on the political uncertainty inspired volatility in the foreign exchange markets.
Despite the ECB also producing its own QE programme, Mr Gallo believes that EUR/GBP will be supported by the £0.65 level.
Update by
19-Feb-15
[9:15am]
UK Election Betting Update
Below, a quick look at how Spreadex is pricing up the market.
Note, if you are logging into your Spreadex account, you need to log into 'Sports' rather than 'Financials' to access these prices.
Interesting to see that UKIP are more likely to get an overall majority (100/1) than Nick Clegg's lot (500/1). Having said that, when fixed odds prices get to 100/1 they are pretty spurious to me.
It wouldn't be difficult to find a bookie offering odds of 100/1 or 500/1 for Elvis being found alive.
Realistic Overall Majority?
In a bar the other night I heard some of those clever lads at Goldman Sachs saying support for Labour and UKIP will drop significantly and the Conservatives would get an overall majority.
The market isn't forecasting that though.
For all the negative commentary around Red Ed, the spread on Conservative seats is 280 - 286, only a dash ahead of Labour's 275 - 281 seats.
That's way off the 326 seats needed for a majority.
The fixed odds 'No Overall Majority' is also priced at 1/5, so the current market suggests that we're in for another coalition.
Spread Betting Prices
General Election Seats
Spread
Conservative Seats
280 - 286
Labour Seats
275 - 281
SNP Seats
36 - 39
Liberal Democrats Seats
25 - 28
UKIP Seats
5.5 - 7.5
Note: 650 seats available, the Speakers seat and seats in Northern Ireland do not count towards this market.
Binary Election Prices
Most Seats
Binary Spread
Conservatives
55.5 - 62
Labour
38.4 - 44.5
UKIP
0 - 1
Liberal Democrats
0 - 0.2
Note: These binary trades make up (close) at 100 if the party is named as having the most seats, otherwise they make up at 0.
Fixed Odds Election Prices
Most Seats
Fixed Odds
No Overall Majority
1/5
Labour Majority
14/1
Conservative Majority
9/2
UKIP Majority
100/1
Liberal Democrat Majority
500/1
Overall Majority
Fixed Odds
Conservatives
8/13
Labour
5/4
UKIP
100/1
Liberal Democrats
500/1
Update by Jacob Wood, Editor,
UK General Election Spread Betting Example
In the run up to the UK's General Election on Thursday 8 June 2017 investors can speculate on the number of seats that each of the major parties... and UKIP... will win.
They can also speculate on voter turnout, the estimated turnout looks pretty miserable at around 62%.
Looking at FinancialSpreads.com you can spread bet on the number of seats that the Conservatives will win.
In this case, they have priced their Conservative Seats market at 397 - 401, i.e. suggesting that the Conservatives will win 397 - 401 seats.
Therefore, you could spread bet on the Conservatives winning:
More than 401 seats, or Less than 397 seats
When spread betting on a "Seats" market you are simply betting in £x per seat.
If you risked £5 per seat and the Conservative Seats market moved by 21 seats then that would alter your P&L by £105. £5 per seat x 21 seats = £105.
UK Election - Conservative Seats Example
Now, if you take the above spread of 397 - 401 and assume:
You've reviewed the polls, the news etc. and
You think that the Conservatives will get more than 401 seats at the election
Then you may decide to "buy" the market at 401 and bet, let's say, £4 per seat.
If you "buy" the market you will make a profit of £4 for every seat more than 401 that the Conservatives win.
Of course, such a bet also means that you will lose £4 for every seat that the Conservatives get less than 401.
Put another way, should you buy a spread bet then your profits (or losses) are calculated by taking the difference between the final price of the market and the price you bought the spread at. You then multiply that price difference by the stake.
If the Tories exceed expectations with a Tony Blair-like landslide and won 441 seats, you'd make a profit:
Profit = (Closing Price - Opening Price) x stake
Profit = (441 - 401) x £4 per seat stake
Profit = 40 x £4 per seat stake
Profit = £160 profit
Trading on financial markets, or political markets, is rarely straightforward.
In this example, you had bet that Theresa May's party would win more than 401 seats. Of course, they could disappoint on election night.
If Jeremy Corbyn's Labour Party did better than expected, the Conservatives might only win 368 seats. If so, you would end up losing this trade.
Loss = (Closing Price - Opening Price) x stake
Loss = (368 - 401) x £4 per seat stake
Loss = -33 x £4 per seat stake
Loss = -£132 loss
Note: Conservative Seats market accurate as of 11- May-2017. Other firms may also offer this market.
'Political Spread Betting' edited by Jacob Wood, updated 08-Jun-17
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Political Spread Betting
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More than 401 seats, or
Less than 397 seats
