Markets Say: “Barry Bonds Almost Certainly To Serve Time”

800px-Barry_Bonds_strike.jpgThe Intrade contract price for Barry Bond’s guilt is currently trading at 75, which means traders estimate that there is a 75% chance that Bonds will either by convicted or plead guilty to the original charges. As I once discovered to my chagrin, this does not mean that traders believe that Bonds has a 25% chance of avoiding a conviction. As the contract rules state:

The contract will settle (expire) at 0 ($0.00) if (including, but not limited to):

– Barry Bonds is found not guilty in a trial by jury or judge

– All charges are dropped

– The case is dismissed

– There is a mistrial

Barry Bonds pleads guilty only to lesser charges as part of a plea agreement (please note that if Bonds pleads guilty to any of the original charges as part of a plea agreement the contract will expire at 100)

The italicized rule is the kicker. Since you’ve got to figure that a plea is highly likely, it fair to say that traders estimate the likelihood that Bonds will face time to be a near certainty.

Of course, volume has been almost nonexistent. The question of how illiquid a prediction market can be while remaining efficient is beyond my paygrade.

(Image Source: Wikicommons)

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1 Response

  1. Frank says:

    B-P have some interesting comments on the bond market as predictor:

    http://www.becker-posner-blog.com/archives/2007/11/is_the_bond_mar.html