Projected CON majority: 34 (+8) seats

Whatever the rights and wrongs of yesterday’s fierce exchanges in the House of Commons the spread betting punters who risk shed-loads of cash on the commons seats markets have given their verdict by “buying” Conservative seats and “selling” Labour.

On Tuesday, as I reported here after the Populus poll, the commons seat spreads from PB’s co-sponsor, Sporting Index were: CON 336-342: LAB 240-246: LD 43-46 seats.

Taking the mid-point between the buy and the sell price that suggested a Tory majority of just 26 seats. Yesterday following the PMQ row there was a sharp move back to the Tories which at the end of the day had seen a big shift to a position that suggests a 34 seat majority. This is still some way down on mid-September when the prices pointed to a 54 seat majority.

Spread betters are “trading” the number of commons seats the parties will get at the election as though they were stocks and shares. There are big rewards if you get it right but big losses if you don’t.

Thus on the morning of Brown’s election U-turn announcement in September 2007 the Labour buy level reached 338 seats. Today the party’s spread is at 236-242 seats so if you wanted to get out of that contract it would cost you the difference between the level you bought at and the current sell price multiplied by your stake level. In this example that would be 102 seats – and at £50 a unit that would leave you £5,100 poorer.

A key element with this form of gambling is that you can close down a position today and take a profit even though we might be 21 18 months away from the event itself.

Mike Smithson