Is Donald Trump now being under-rated?

If not, there must be huge value to be found elsewhere

Ahead of what seems a likely defeat tonight in Wisconsin, market support for Donald Trump continues to deteriorate. At 2.06 this morning, the GOP front-runner is the biggest odds he’s been since winning South Carolina in February to become the Republican Nominee.

There are good reasons behind this decline. He’s just endured a terrible week, coming under fire over a whole range of comments, tweets and contradictory policy positions. Losing Wisconsin would be significant, and a massive boost for Ted Cruz.

However, every candidate has their correct price and I suspect that either one or both of the main candidates are now under-estimated. Combined, their odds equate to only 74% – implying there is a better than one in three chance of somebody other than the candidates who have won almost every state between them.

That is of course possible, and why I’m on Paul Ryan, but should it really be as high as 26%? If so, then perhaps Ryan is under-estimated at 7%. The third man, John Kasich, has an extremely difficult path and makes no appeal at 11%.

Note the combined percentages of all four is only 92%, implying an 8% likelihood of somebody else, barely on the current betting radar. The next shortest odds are Marco Rubio and Mitt Romney at 100.0 – neither of whom appeal at all. If stopping both Trump and Cruz would cause a revolt, picking either someone who had already lost this race, or the losing 2012 candidate, would probably cause anarchy.

This un-named other candidate surely has to be a genuinely fresh face to this race. Ryan is the most obvious, but there are others with potential. In expectation of more drama in this market over the next three months, I’ve had a speculative 2 unit bet on Nikki Haley at the maximum odds of 1000.0.

Haley is certainly a more realistic and electable alternative to Rubio, Romney or Jeb Bush. All it would take is a few rumours, or a few influential types to champion her cause, to get these odds to shorten up significantly. She’s popular with both the establishment and grassroots. Her endorsement was one of the most highly sought in this race. I don’t think she’ll be the candidate but at these odds in such an unpredictable scenario, she’s worth a punt!

Without something dramatic happening like Trump’s total implosion, though, it is hard to see how he drifts further than 2.06. After Wisconsin, the rest of this month offers a stack of winning opportunities. After New York and the North-East, the only Cruz path to the nomination will be via the convention. Plus if the polls were wrong tonight and Trump won Wisconsin, his odds would collapse.

Even if, as most now believe, we get a contested convention, Trump can still win on the first ballot by attracting enough unbound delegates to pass 1237. That probably depends how close he gets, but if he were only a few dozen short, it would be very realistic.

If truth be told, I cannot confidently price such a unique candidate in such a unique situation. Whereas Cruz is certain to stay in the race even if losing, because it suits his long-term political interest, Trump is totally unpredictable. I don’t trust Trump to not implode or quit, even if that seems highly unlikely. I don’t enjoy having short-priced bets that could lose without even offering the chance of a cash out.

Nevertheless, I certainly wouldn’t take him on at these odds. Better instead to have speculative trades on others – as has worked to good effect on Cruz and Ryan.

New bet

Backed Nikki Haley to be the Republican Nominee 2u @ 1000.0

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