Last week, I wrote
about the TradeSports contract
on whether Alex Rodriguez would stay at the Yankees. It might be "a screaming
buy," I said, but warned that it was very illiquid.
So what has happened to the contract now that A-Rod is known to want to stay
in the Bronx? It’s essentially dried up entirely. Of the six trades in the
contract yesterday, all but one of them had a volume of 1, and the sixth, earlier
on in the morning, had a volume of 11. Right now, the bid-ask spread looks like
the Nile Delta: the contract is bid at 37.2 and offered at 99.5.
In the financial markets, volume normally goes up at inflection points like
this. On TradeSports, by contrast, that doesn’t seem to happen. I’m not entirely
sure why that should be, but it is a problem for anybody with a trading (rather
than buy-and-hold-to-maturity) strategy.