Is the upcoming presidential election not giving you quite enough anxiety? Then what if you also had money riding on it? Well, if you’re a Robinhood customer, now you (potentially) can!
That’s right, early this week, Robinhood unveiled its Presidential Election Market. Here, eligible customers can purchase event contracts tied to one of the two major candidates. Should the candidate you purchased contracts for win, they’ll pay out $1. If they lose, you get nothing (good day, sir!).
To be as clear as Robinhood is in their promotion of this feature, buying a contract is not akin to voting… and the fact that they even need to spell that out is kind of what worries me about this service in the first place. Nevertheless, I decided to take a peek and see what this market was up to.
On the day this was announced (and even the day after), I didn’t see anything about it in my Robinhood app. However, the next time I checked, I noticed that there was indeed a section on my Dashboard showing me current contract prices for each candidate. Still, tapping this section didn’t do anything — and that’s because you first need to be approved to trade event contracts.
So how do you apply for this approval? First, you’ll want to head to your profile page (the person icon in the right corner), then tap the menu in the upper left, select Investing, and scroll down to Event Contracts Trading. To apply, you’ll need to answer a few questions, such as:
- How many years of futures trading experience do you have?
- How many years of forex trading experience do you have?
- How many years of investing experience do you have?
- What is your main objective for trading futures?
You’ll also need to confirm your account information and agree to some terms before submitting. If approved, you’ll be notified and given a Robinhood Derivates account number. In my experience, after approval, I was able to head back to the Dashboard and tap the 2024 presidential election center.
The first thing you’ll see is the current pricing for each candidate’s contracts as well as some trend lines. Below that, you’ll see buttons to either “Buy Harris” or “Buy Trump.” It should be noted that you can only hold contracts for one candidate at a time. In other words, you can’t hedge by buying 20 Harris contracts and 5 Trump ones.
At the time that I bought, Harris contracts were trading at 39¢ each (while Trump ones were 62¢). Yet, that’s not how much I ended up paying. What was then a 2¢ exchange spread brought my cost up to 41¢ while the 1¢ contract commission meant that my total for 10 contracts was $4.20. Should Vice President Harris be certified as the election winner, these contracts will pay out $10, amounting to a profit of $5.80 for me.
By the way, in the case of the exchange spread, this can vary. In my time monitoring these contracts, I’ve seen the spread as low as one cent and as high as 3¢. Meanwhile, Robinhood’s 1¢ per contract commission seemingly remains the same.
To be completely honest, I’m not exactly sure how I feel about the ability to — for all intents and purposes — bet on the presidential election. But, being the good reporter that I am, I felt I needed to at least try it to see how Robinhood’s latest feature works. So, while I might not recommend trying this option for yourself, at least you now know how to if you want. After all, it’s a free country.