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curious about expiry fees in Intrade
I'm curious about the 0.10 fee on contract expiry. Does this mean that if I hold a contract that reaches its end date at a profitable position, say 1.00, that I would receive 0.90? If so, why are buyers willing to pay 0.95 for a contract that Obama wins the nomination? If he wins, they get 0.90, if he loses, they get 0.0.
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Inappropriate?Hello Aran,
Apologies for the delay in reply. The $0.10 expiry fee is charged for each contract held when that particular contract is expired. This fee is applied to winning positions only - if you lose then no expiry fee is charged.
The math in your example is slightly wrong however...
If you buy a contract on Obama winning the nomination for 95.0 then in real terms you are paying $9.50 (each contract is worth $10.00). At this price your profit will be $0.50 when the contract is expired at 100, leaving a net profit of $0.40 per contract once the expiry of $0.10 is deducted.
Currently the best price you can buy Obama's nomination contract at is 95.0. This doesn't necessarily mean that this is what buyers are willing to pay for the contract - but it is what sellers are trying to sell it for. If the buyers don't want to take this price then no trading will occur.
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