What is the TRUMP-2020 Futures Contract?
In a move that’s as bold as a presidential tweet, FTX has introduced a specialized futures contract, cheekily dubbed TRUMP-2020 (TRUMP). So what does this contract actually do? It essentially allows traders to wager that Donald Trump will take home the prize in the 2020 presidential election—if he wins, the contract cashes out at a crisp $1; if he loses, you get nothing, folks, zip, zero, nada.
Polling and Approval Ratings: A Closer Look
As FTX throws its hat into the political betting ring, a recent Gallup poll shows Trump’s approval rating crawled upward to 49%, which is like winning a participation trophy for the incumbent. Among Republicans, he’s enjoying a resurgence, with a six-point bump since January. That’s side-eyeing impeachment and saying, ‘Not today, Democrats!’
Understanding the Trading Mechanics
Ready to roll the dice on Trump’s political fate? Here’s how it goes. The price of a TRUMP contract reflects the market’s estimation of Trump’s reelection chances. If traders believe there’s a 52% likelihood he’ll win, then the contract should hover around $0.52. But beware! Trading isn’t a straightforward carnival game; there are margins to consider, and a risk price tagged at $5 per contract.
Key Margins Explained
- Going long? Your maximum margin equals the mark price.
- Going short? Hold onto your wallet, because your margin is pegged at a $1 mark price.
When and How Will the Contract Settle?
Mark your calendars! On November 3, 2020, FTX will settle the contract based on media consensus about who emerged victorious, not on the slow drip of official vote counts. Talk about cutting through the political red tape!
The Good, the Bad, and the Trump Bump
While Trump’s relationship with cryptocurrency has been rocky (who could forget his Twitter tirades against Bitcoin?), there’s been a silver lining for traders: the “no news is bad news” phenomenon. Even his criticisms have sparked interest and buzz in the market, giving rise to what many are calling the “Trump bump.”
