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Tracking the Cantor Index Spread

By Reagen Sulewski

July 26, 2001







One of the more interesting developments for numbers gurus like myself in recent months is the introduction by the Cantor Index of spread betting for the North American box office. Finally, an opportunity (at least, in theory) to put actual money on the line for predictions. Any guru worth his salt should jump at the chance to prove his prediction ability. This development was inevitable, given the British propensity to bet on just about anything, and especially since the purchase of The Hollywood Stock Exchange by the Cantor Index.

Unfortunately, due to various legal fuzziness, I can't quite tell if it is in fact legal for me living in Canada to place (and more importantly, win money from) bets in England. That doesn't stop me from faking it though. Setting myself up with a fake £500, over the course of the next weeks and months I will play the line listed at the Cantor Index site as if it were. If nothing else, it's an interesting test of mettle.

The concept of spread betting takes a bit to get used to for those used to the traditional Vegas style sports book betting, but for those familiar with the idea of stock trading, the learning curve should be shorter. I encourage everyone interested in this topic to check out this link which explains it much clearer than I can. The analogy with stock trading should be clear, as your bet is really investing in a position with a future fixed value, albeit one that can be highly uncertain. You are also able to buy back or sell off your bet at any time up until the bet closes, taking your profit early or cutting your losses.

Here are the basic betting guidelines as set out by CI:

  • Settling figures are based on EDI actual box office figures.
  • Bet values are allowed between £1 and £100.
  • 1 'point' will be equal to US$1,000,000 at the box office, with rounding to the nearest half million.
  • Total wins and losses per bet will be limited to 100 points.

Another major aspect of spread betting is the requirement of large margins, due to the great potential for losses. Note above that on a £100 bet, there is the potential to lose £10,000, although this is a very small likelyhood. I haven't been able to determine the actual margin required at Cantor, but to keep it as realistic as possible, I will attempt to keep a margin of at least 15 times my total betting.

There are of course other legalities, but that's really all that's necessary to get started for a dummy account. I'll also attempt to keep as close to how actual bets and payouts will work from there, with cash-outs being done on Wednesdays.

At the time of writing, here are the available bets:

Available bets
Symbol
Film
Release Date
Sell
Buy
PLNTAPlanet of the Apes Weekend27-July-01$53,000,000$55,000,000
JURA3Jurassic Park 3 Four weeks27-Jul-01$149,000,000$154,000,000
PLNTAPlanet of the Apes Four weeks 27-Jul-01$155,000,000$160,000,000

An important thing to note here for the benefit of HSX visitors is that the Cantor definition of four weeks is just that, a full four weeks, instead of the 4 weekends definition that most would be used to.

With my initial stake of £500, I've decided to take the following positions:

(Buy) Planet of the Apes - Weekend £20
(Sell) Jurassic Park III - Four Weeks £5
(Buy) Planet of the Apes - Four Weeks £5

Leaving the rest to stand as my margin. These bets mean that I stand to win £20 on every million Planet of the Apes goes above $55 million or lose the same on every million below; win £5 on every million Jurassic Park III grosses below $149 after four weeks, or lose £5 on every million above; and to win £5 on every million Planet of the Apes grosses above $160 million after four weeks or lose £5 on every million below. It's also important to note that these bets are not fixed; if the spread moves sufficiently on the bets where I feel my maximum profit is reached, I can cash out early, or attempt to limit my loss if I feel that I've taken the wrong position and the value of my bet is rapidly decreasing.

Check back weekly to watch my fortunes grow, or to watch my downfall and eventual flight from the mob ("Midge, they're gonna take my thumbs!").

A special thanks to Paul Lee for pointing out some rather egregious errors in the first posted version of this column.


The information in this article is for entertainment purposes only and does not constitute any form of advice or recommendation in making any specific investment or betting decisions. Nothing in this article is intended to encourage or facilitate any activity that is prohibited by the laws of any governmental authority.


     


 
 

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