Full Cashout on Theresa May leaving date bet

Today Theresa May announced her resignation, as political types in the press had predicted.

As I mentioned in a previous post, I had already reduced my liability on this market, so that I couldn’t lose. This was my position:

Since this original cashout, May’s odds of leaving before the end of June had gone out to 3.0. This is because while most agree she was leaving soon, a Tory leadership contest would likely take until the end of July. So the question in terms of this market was: Will she step down now and appoint a temporary Prime Minister (my bet wins), or will she wait until the end of the leadership contest.

So as soon as I heard she was about to make a statement I turned on the TV in my office to decide whether to cashout or not.

She said she was going to step down on June 7th, and as she said this the odds of her leaving by the end of June plummeted, down to 1.3 or so. Sky News put up a banner saying “May to resign on June 7th”.

But according to my theory, that meant my bet would lose. I was wondering what I was missing, and was scared to cashout. I assumed the market must know something I didn’t.

As soon as the speech ended, Adam Boulton the presenter on Sky News said something along the lines of “She’ll resign on June 7th, but that’s not necessarily the date that she’ll leave office”.

As soon as I heard that, I cashed out at an average price of 1.3-something. Giving me this position:

I still assumed the market must know something I don’t. When I checked prices an hour or so later, May leaving by the end of June was at 1.09!

Now, a few hours later the price has drifted to 4.1. So it definitely seems I was right to cashout.

Conclusion

There are a couple of conclusions I can draw from this:

1. Trust what you know, even if the market doesn’t agree. I’d rather be wrong backing myself, than wrong foolishly following the market.
2. Any time when the bet relies on the whims of politicians’ decisions, cash out once you’ve captured most of the value.

Note this profit won’t appear on my total in the bottom-right hand side of the page until the market is fully settled.