PMB

Betting on markets that matter…

Will trump tweet again in 2022?

Where to trade this market: Polymarket

How to deposit money and trade on Polymarket: Documentation

This is a very valuable question that a lot of people are speculating on. For people like me I have a direct financial outcome depending on whether this happens or not. Others have a lot of indirect financial exposure to this event happening. Many political analysts agree that the reason Trump won the presidential election in 2016 is due to his unorthodox use of social media (specifically twitter).

With Trump recently announcing his bid for the 2024 presidential election and being reinstated on twitter by Elon Musk it is speculated that he will run a similar campaign like he did in 2016 and 2020. Many analysts and political bettors (like me) believe that he will use twitter, but is their immediate urgency?

Lets dive in:

Trump has business ties that he is not willing the pull the plug on. With the launch of Truth Social and public SPAC that took place his brand is once again in the spotlight. He has financial incentives to not leave the site since the success of Truth Social relies on Trump remaining loyal the company.

Source: Washington Post

Trump has continued to advocate for his platform immediately after the Musk takeover:

Source: Washington Post

The only problem is if he plans to run a successful campaign he needs access to more users. On Truth Social he has 4M followers and on twitter he has roughly 87.5M at the time of writing. 

If you have bet on trump events before you know how volatile markets can move. Everything is in his interest to use twitter. His campaign will benefit, his brand will benefit and the normalization of Trump will come back into the lives of average Americans.

Volatility in the market:

Source: Polymarket

The highlighted section shows the time when Trump was officially reinstated back on twitter.

With growing tensions between Musk and Trump I lean more to the side that Trump will not tweet again in 2022. 

Beef between Musk and Trump:

The market is currently pricing “No shares” at .72 at the time of writing this article. Based on my analysis the value on the “No” side of the market is there. Based on the distance between now and the 2024 campaign Trump has plenty of time to play games on Truth Social and wage war on the most popular billionaire. Trump knows this is good publicity and will continue to milk it until the public does not care anymore.

I believe this market should be trading at a premium of its future time decay. I believe the current market price of “No shares” should be trading in the .79-.84 price range at the time of writing. There is still a lot of locked up money holding “Yes” shares after Trump’s twitter reinstatement, and I believe that is mostly dumb money 

Price appreciation of “No shares” based on time decay assuming the current share price of .72, and the targeted share price of 1.00.

The majority of the smart money is also holding and continuing to accumulate “No shares” on this market. The screenshot below shows the top traders on this specific market. 

Source: Polymarket whales

How I recommend trading this market:

There has been no material evidence that Trump is planning on transitioning to twitter in the near future. With being in the last month of the year time is on our side, and “No shares” are undervalued based on traders over reacting to Trump’s previous irrationality.

I say the main risk of “Yes” hitting is if the hype around the twitter files blows up into a huge global story in which huge political points can be earned for republican candidates that interact directly with the story (more motivation for trump to make an appearance on twitter). 

I am predicting that there is a greater chance of this market making a move into the .85-.88 range in the seven days. With a decent amount of liquidity in this market (6k+) it allows for traders to make larger +EV bets. 

The play here is to simply accumulate as many shares in the low .70-.75 range, and begin to take some risk off in the .88-.92 cent range. I believe this target price range can be hit before the holiday season. Which is generally a season that carries more risk due to more consumer engagement on social media platforms

Based on my model I believe the market should be trading at a .01-.02 premium on its time decay due to the outsized bets that were placed on him tweeting due to his reinstatement.

Fair value today (No Shares): .79-.82 range

Market price today (No Shares): .7249 

Recommended Unit bet Size: 4 units

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