Financial Binary Betting, Styles, Valuations and Deductions from Data
AbstractA relatively new form of financial spread betting, the binary bet, has become popular. Part of the popularity of this style of bet, from the gambler's point of view, is undoubtedly due to the simplicity and transparency of the contracts. The fact that these bets are free at the time they are taken is an added inducement. For the bet provider, as long as the correct buy and sell levels are maintained during the betting period and the betting frequency on any contract is high, it is again relatively simple to ensure a known income from the operation. Binary spread bets are examples of financial derivatives and the standard methods used in that field can be used to deduce the parameters that should apply. This gives useful information to the gamblers in telling them how much they are paying for the bet. Watching how the quotes are moving in time can also inform how the gambling community is behaving and what the average view of the outcome is. A variety of types of binary bets are valued and in many cases it is possible to derive analytic formulas. These can be applied to time series data that are acquired from quotes and used to deduce information about the bets held by a provider and the market expectations of the community.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by University of Buckingham Press in its journal Journal of Prediction Markets.
Volume (Year): 1 (2007)
Issue (Month): 2 (July)
Contact details of provider:
Web page: http://www.ubpl.co.uk/
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Palan, Stefan, 2010. "Digital options and efficiency in experimental asset markets," Journal of Economic Behavior & Organization, Elsevier, vol. 75(3), pages 506-522, September.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Victor Matheson, College of the Holy Cross).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.