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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: Nadine Carroll who wrote (67302)	1/21/2003 12:37:26 AM
From: Elsewhere	Read Replies (1) \| Respond to of 281500

I'm not sure I quite understand futures in Saddam, how do you exercise the option? what is the strike price? who pays who at expiration? Here's my interpretation of the rules: the quote of the future may vary between 0 and 100. It can be bought or sold until expiry. A profit or loss occurs as the difference between purchase and selling/closing price. The expiration level should be 100 if the bet is true (Saddam is no longer leader) and 0 if it's wrong. Each contract has a value of $10. Best ask for March is 42, so a "win" (Saddam no longer leader) would mean a profit of $5.80 ($10-$4.20). The profit is paid by TradeSports to the trader. The current contract values indicate that traders believe Saddam will leave some time in Q2 (probability by March 40%, by June 59%). The charts clearly show the spikes of the expected resignation probability after the Rumsfeld deployment orders before Christmas and ten days ago.