Intrade

So I thought I would get around to funding my Intrade account and doing some trading. But before I got to that I noticed that Intrade offers contracts on whether or not Intrade will exist in the future.

INTRADE.IN.BUSINESS.DEC11

This contract will settle (expire) at 100 ($10.00) if Intrade.com is still open for business on the date specified in the contract.

The contract will settle (expire) at 0 ($0.00) if Intrade.com is still NOT open for business on the date specified in the contract.

I'm not sure about the legal structure of Intrade or if the trades would be cleared in some way but betting on the destruction of an business on it's own exchanges seems like a lose/lose bet.

Perhaps a more cynical way to look at this is that Intrade offers a contract on it's existence, knowing that most rationale traders would never short it because it's a bet with little upside, which means the contracts are artificially overpriced and therefore give the illusion of safety to most traders (Look! Only a 2% chance Intrade goes under).

Maybe that's a bit extreme but currently for the existence of Intrade before Dec 31 contract has 180 on the bid and one, lone offer at 99.5. 

Now I'm not saying Intrade is going out of business, but it's surprising that there isn't a little bit of risked priced in given that Intrade is incorporated in.....Ireland. 

Since the whole crisis began there haven't been any trades in Intrades existence contracts. 

Intrade makes a point of saying that customer accounts are kept in separate, individual accounts. However somehow there FAQ feels like it needs to be rewritten. 

"These segregated accounts are maintained with some of Irelands largest banks."

Safety indeed.