One of these prices is wrong

Under MMP, Winston Peters re-enters Parliament if he wins an electorate or his party passes 5% of the party vote. But Peters isn't standing in an electorate and I can't see any NZ First candidate taking an electorate.

Trading at iPredict has New Zealand First's vote share at 5.25%.

But a contract paying $1 if Peters re-enters Parliament is only worth $0.3175.

Maybe you could tell a story about right tail skew such that he's unlikely to pass 5% but if he does, he gets 20% and so the prices work out, but I really wouldn't believe it. I think instead the vote share market is skewed. Somebody expecting Peters to get 3% instead of 5% gets a 2 cent return on a 95 cent investment (there are no naked shorts); somebody who wants NZ First to look like it's set to get 5% doesn't have to spend a lot to keep the price up there.

It's still a decent return over the next fortnight or so. I've consequently put in a 500 unit order selling NZ First vote share at 5 cents. When somebody spends $25 to push NZ First's vote share up above 5% again, it will tie up $475 of my capital for the next two weeks. If the contract expires at 3 cents, as I expect it to, I'll earn $10. W00t, as they say. But the only reason I'm willing to do it is that I've a fair bit of  free capital on iPredict and, more importantly, capacity to deposit more as the deposit limit isn't currently binding on me. The opportunity costs of money on iPredict can be pretty high as there are often profitable short-term price anomalies requiring free capital.

I'd hoped that relaxing the deposit limits on iPredict would knock back some of the weirdness on low-price continuous contracts; there were Peters price anomalies in 2008; I'd thought the less binding deposit restrictions this time would help out.

If you've free cash around and think a slightly higher than 2% return on a fortnight is worthwhile, and that NZ First is more likely to get 3% than 5%, do well while doing good by correcting price anomalies.

[Update: Checking prices again after hitting "Post", NZ First had already dropped to 4.5%. You guys are quick!]