Update: We’ve spoke to the trader who says he spent $35 shorting the contract in 10 trades, causing the flash crash.”I did this to show that Intrade is fun to watch, but it’s BS to trade,” he said.
Volume on this contract barely exceeds 100 shares/day, so we’re inclined to agree with him.
Original: A prediction market on Intrade crashed Wednesday evening, after House Majority Leader Eric Cantor reported that President Barack Obama walked out of the ongoing debt ceiling talks.
Prices on a contract which would pay out $10.00 if the debt ceiling were raised to $15.1 trillion by August 31 dropped to just $0.01, at one point Wednesday evening. The contract quickly regained it’s value, placing the chances of reaching a deal at 65 per cent.
A separate contract on whether the debt ceiling would be increased by the end of July gives lawmakers a 40 per cent chance of reaching an agreement, down from 60 per cent on Monday.
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