Tradesports free money no longer a secret?

[eLROY]

A few weeks ago in the Tradesports thread, I related a rough recollection of some idiot dumping 15,000 contracts to run it down from the low 60's to 49.2, only for it to recover almost completely by nightfall. It was soon after, that Tradesports started publishing more rows in their standard order book display for that contract. I saw similar behavior two other times, one at a time after one of the debates which I thought could possibly have been attributed to the release of the Gallup debate numbers. Then in the last few days, in the midst of a switch to a strategy of hammering it with smaller, more frequent sell orders (all the anomalous volume piles up on gap downticks), the idiot swept it the whole way down to 10 in one huge order - and then filled in behind with replenished sell limit orders to keep it from bouncing. According to the following unsourced quote, Tradesports apparently has revealed that it was indeed the same person:

[ QUOTE ]
Yesterday the price of the futures were sold down from about 55 (indicating the market's estimate of a 55% probability of Bush's re-election) to 10 (indicating on a 10% probability) with a single 10,000-lot order entered by a single trader. An order that size represents twice the normal volume of an entire typical day's trading. Within moments after the order was completed, the price recovered back to the low-mid-50's.

According to sources at Tradesports, yesterday's order was entered by the same individual who has heavily sold the Bush futures three times over the past month. The first instance was on September 14, when this trader sold the futures down from the mid-60's to 49.6. The second instance was in the middle of the second presidential debate on October 8, when the futures were sold down from the high 50's to 51.5. The third instance was right after the third presidential debate on October13. As the debate began the futures were priced at 57, and by the end of the debate they had risen to 60. Then a few moments later they were beaten down to 54 in a matter of minutes.

[/ QUOTE ]
It's odd, because this morning just before I read this quote, I was noticing that volume was a little more smooth and orderly, and could possibly be explained by a general uptrend approaching the election - though still a little high. I did a calculation at one point, taking into account the possibility that the selling had come from multiple accounts acting in concert. I don't remember, but I think I estimated that something like 60,000 contracts had been sold an average of 15 points below the market. In other words, it's almost nothing in money terms. So I guess indeed someone was buying cheap advertising for Kerry. But anyway, it looks like more bidders have suddenly caught on, and are starting to try to take advantage of what this guy has been giving them. I guess it's winners all around! The only other odd behavior was the short squeeze to 57 and fallback after Kerry's convention speech, but the volume wasn't high enough to make me think anyone was painting it.

P.S. Bang, was that just another one?

[largeeyes]

Well, it somehow got down to 51 in todays session(it must have been an early spike.....I don't see it on the chart). But it closed all the way up near 58 it seems. There are some very sizable lots at 57, 55, and 54.8. You're looking at having to burn through about 2600-2700 shares just to get back to 54. At a loss of $5 each, that's about a $10,000 investment just to get it back to 54! Although that seems like chump change to our short. Wish I had some orders in there when that happened!

[largeeyes]

Here's something I just noticed as well. Even at 57.8-58 where he's at now, it's a huge discount to fair market value. Pinnacle Sports has him -156, or about 60.5. Kerry is +146 there, setting up a pretty large scalp with Bush's -137 at Tradesports

[eLROY]

The Florida contract also seems to be a pretty steady arb. As soon as Bush got over 60 a few minutes ago, someone sold it down to 58, leaving a greater than 2 point spread behind him. This time, it filled back in like water.

There has to be correlation, such that if Bush gets Florida there is a 92% chance he will also get Ohio, and an 88% chance he will win the election.