Marco 221 Report post Posted October 30, 2012 Hi all, what are the expectations for the presidential elections? From what I can see here (some election odds 'exchange') and other betting pages, Obama is still tipped to win this. However his lead shrank quite a bit since the TV debates and who knows how 'sandy' is going to influence his chances. So I suppose the market is pricing this close to 50/50 now and if 'the market' prefers one candidate more than another (I suppose Wall St. wants Romney?) it will move quite a bit on post election day as nothing is priced in. - I wonder what the initial reaction of the market will be in terms of direction and magnitude of move if either candidate wins. - How much have markets moved on presidential elections in the past? - Will implied vol drop? A lot? - Will the market focus more on the upcoming 'fiscal cliff' and is either candidate 'better' for a solution to this problem? (as in a compromise between the congress/senate/president) Or does it not really matter as they both have to either cut spending and/or raise taxes? interested in your views. (I'd like to have a discussion about the market impact though not so much about politics and your or my political views ) Marco. Share this post Link to post Share on other sites
Rogers 263 Report post Posted October 30, 2012 my 2 cents.. Romney seems to be more business friendly than market friendly. He is adamant about removing Bernanke and that will hurt the market imho The market does not like uncertainty and Romney represent the unknown. At least with Obama you know what you are going to get; kick the can down the road and let the next guy take care of it. More debt, more glidlock and sub par economic growth. Share this post Link to post Share on other sites
jr1221 12 Report post Posted October 31, 2012 One trade I was thinking about...if Romney gets elected, it's a big win for the coal industry. If Obama gets elected, not so good for coal. I could maybe see a straddle play through the election (assuming IV doesn't increase much in the ensuing days), with expectation of a good move depending on who gets elected. Not sure if a coal ETF would be a choice (haven't looked up the ticker on one) or maybe a player in the industry. BTU moved a lot after Romney won the first debate. My only worry with BTU is that the straddle price won't be very high and could be a little commission consuming. Overall I could see option IV's drop across the board after the election is decided, but I'd expect several sectors to move up or down depending upon who wins. I wonder what happens to GLD if Romney wins...would he lobby to end or limit QE? Share this post Link to post Share on other sites
Marco 221 Report post Posted October 31, 2012 Yeah Romney win is supposedly bad for GLD as he opposes QE. I had a look at the last 6 elections and the results for SPX and VIX were quite mixed hard to make a trade out of that by the looks of it. Certainly no no-brainer to be long or short vol or delta. Share this post Link to post Share on other sites
EricSimpson1 5 Report post Posted November 4, 2012 Nate Silver's statistical models have been reasonably accurate in the past. Right now he has Obama at an 85% chance of winning. Intrade has Obama at a 64% chance. Many other betting sites are predicting an Obama win. I don't know what the market will do but I wouldn't be surprised if it has priced in an Obama victory by the time the results come out. Romney winning would probably cause a larger move either way, because he has longer odds. I don't plan on trading the election but I'll keep an eye on my QCOM pre-earnings straddle due to the possible impact on IV. I might get out a day earlier. Share this post Link to post Share on other sites
Marco 221 Report post Posted November 4, 2012 post election day (and likely IV collapse) might be a good day to pick up some vol as market is likely to move on quickly and focus more on fiscal cliff again. Will look to sell some VIX puts maybe if VIX drops low enough (16 and below) Share this post Link to post Share on other sites
Marco 221 Report post Posted November 6, 2012 confused about todays signals from the market: intrade and betting pages have the odds of Obama winning at 75-80% now. GLD seems to indicate Obama victory as well (QE unlimited goes on). Dollar should drop for that reason but doesnt move much at all. Stock market is a bit more difficult to call you can argue who is more bullish for stocks (Obama & QE & likely continuation of deadlock - or Romney supposedly more 'pro biz' but more hawkish on QE, and (probably) having the congress on his side) so not sure what the rally in the stock markets is trying to tell me .... Share this post Link to post Share on other sites
Rogers 263 Report post Posted November 6, 2012 i heard a joke that democrats always have a lead early in the day because republicans have to wait until after work to vote Share this post Link to post Share on other sites
jr1221 12 Report post Posted November 6, 2012 One trade I was thinking about...if Romney gets elected, it's a big win for the coal industry. If Obama gets elected, not so good for coal. I could maybe see a straddle play through the election (assuming IV doesn't increase much in the ensuing days), with expectation of a good move depending on who gets elected. Not sure if a coal ETF would be a choice (haven't looked up the ticker on one) or maybe a player in the industry. BTU moved a lot after Romney won the first debate. My only worry with BTU is that the straddle price won't be very high and could be a little commission consuming. Overall I could see option IV's drop across the board after the election is decided, but I'd expect several sectors to move up or down depending upon who wins. I wonder what happens to GLD if Romney wins...would he lobby to end or limit QE? This BTU straddle saw nice IV rise today. 12% return on a 1 day trade. Share this post Link to post Share on other sites
