I was sifting thru prediction markets and checking the math on everything, and I think i found a free 9%.
The probability of nasdaq 100 finishing positive is 71%.
The nasdaq 100 at year beginning was 25249
The qqq equivalency is 620
In translation, that's the same thing as saying:
The price of a QQQ $619/$620 call debit spread is supposed to be .71, or the delta being 71
Its not. The debit spread is priced at .81, delta being 81
To take advantage of this, you can buy a put debit spread from $621/$620 which is priced around .20 or -20 delta
And then pair it with a bet on nasdaq ending up positive by end of year at .71 a contract, or 71 delta
With this hedge, you take advantage of the overpricing on the short side of prediction markets.
If you carry the trade out, you get 1.0 on either side, and you're only paying. 91 for it
You carry this through, you're guaranteed 9% return