Why has there been so little movement on the spreads?
It’s been an extraordinary couple of weeks with two polls suggesting that we are in hung parliament territory and, perhaps, a change in the media narrative. What seemed a certain Tory majority in mid-November is looking just a touch different.
Above is the PB Index which is calculated by taking the average of mid-points on the main seats markets and then extrapolating that into a General Election outcome.
The extraordinary thing is that during this period there has been very little movement. Thus the Sporting Index Labour spread moved up one in the immediate aftermath of the MORI poll and moved a further two. a day or so later it slipped back and now, following ComRes it’s back at the 208 – 213 seats level.
An issue here, particularly with the spreads, is that even low unit levels can lead to large losses if punters read it wrongly. The prices tend to be much less volatile than other types of election betting.
So when in October 2007 it looked as though an immediate general election would produce a fourth Labour victory the spread prices never got beyond the 30 majority figure.
It was the same during the Labour slump in the summer. It took a long time for the Labour spread to go below the 200 seat level and it quickly bounced back.
My guess is that we’ll see real movement away from the Tories if an ICM poll reports figures close to MORI’s. If ICM, however, has Cameron’s party still in the 40s then you can see punters moving in the opposite direction.
In 2005 the closing spreads over-stated Labour by about 15 seats and those who bought the Tories seats made a profit. In 2001 the Labour position was understated.