Political Arbitrage Activity

Trading in financial markets involves speculation. It may seem like that speculation would be limited to things like company earnings and economic releases. But, in practice, traders bet on all kinds of seemingly oddball topics. Weather. Box office results. And, in this case, politics.

The goal of political arbitrage activity is to take advantage of unfolding political events. An election is coming up. One candidate prefers free trade. Another prefers protectionism. A trader will try to read polls and place the proper bets to take advantage of the election outcome.