An options-pricing approach to forecasting the US election

John Fry; Steve Bennett; Thomas Hastings

doi:10.1016/j.econlet.2025.112632

An options-pricing approach to forecasting the US election

John Fry^*
, Steve Bennett
, Thomas Hastings

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

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Abstract

A subjective probability argument suggests vote-share estimates from polls can be interpreted as market prices. The corresponding election constitutes the price at a known future date. This makes an options-pricing approach particularly attractive. The approach works well for proportional systems. Here, we show how to adjust the approach for non-proportional first-past-the-post systems. We illustrate our approach with an application to the most recent 2020 and 2024 elections.

Original language	English
Article number	112632
Number of pages	5
Journal	Economics Letters
Volume	256
Early online date	26 Sept 2025
DOIs	https://doi.org/10.1016/j.econlet.2025.112632
Publication status	Published - 01 Oct 2025
Externally published	Yes

Bibliographical note

Publisher Copyright:
© 2025 The Authors

Keywords

Elections
First past the post
Forecasting
Options Pricing
US election

ASJC Scopus subject areas

Finance
Economics and Econometrics

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10.1016/j.econlet.2025.112632Licence: CC BY

An options-pricing approach to forecasting the US election
© 2025 The Authors. This is an open access article published under a Creative Commons Attribution License (https://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium, provided the author and source are cited.
Final published version, 725 KBLicence: CC BY

Cite this

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An options-pricing approach to forecasting the US election

Abstract

Bibliographical note

Keywords

ASJC Scopus subject areas

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