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he really has found some arbitrage

Posted By: Math Boy
Date: 13 Aug 01, 8:21 pm

In Response To: Size your bets according the payoff, not the bet size. (Stanford Wong)

Say that in June docriver took $5K on Seattle 20:1 to win the conference when all the other books had Seattle 10:1. At the time, he could have taken all the other teams at various books and locked in a profit. But he didn't. Now that Seattle line is something like 1:1. What he is essentially doing is making an arbitrage bet without making the negative EV bets at the time of the bet. Future bets change so slowly that when docriver started to see lines fall at a few books, he could have jumped in with hedge bets at slower books. Books are usually protected from arbitrage on futures because of the large vig. But the prices of the hedges have been continuously falling becuase Seattle is so far ahead. So until the playoffs start there is little reason to make any kind of hedge.

You can always overbet if the marginal EV from betting more is less than the negative EV of the hadge needed to cover the risk. He was really planning on taking some arbitrage profit, but never took the other side.

Math Boy

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Messages In This Thread

How to handle the "huge exposure game" -- Fezzik -- 12 Aug 01, 11:53 pm
So, will you be hedging against the Mariners in October? -- James -- 13 Aug 01, 12:33 am
Difference between A's and Eagles -- StevieY -- 13 Aug 01, 11:35 am
that's not a hedge -- docriver -- 13 Aug 01, 12:10 pm
Yes and no -- StevieY -- 13 Aug 01, 12:33 pm
risk -- docriver -- 13 Aug 01, 1:04 pm
Hedging -- StevieY -- 13 Aug 01, 1:38 pm
Example please? -- docriver -- 13 Aug 01, 1:56 pm
Example -- StevieY -- 13 Aug 01, 5:36 pm
because you have 40x in equity now -- docriver -- 13 Aug 01, 6:01 pm
above title should read : 18x, not 40x (nt) -- docriver -- 13 Aug 01, 6:08 pm
You aren't wagering 18,000+ -- StevieY -- 13 Aug 01, 6:11 pm
Agree to disagree -- docriver -- 13 Aug 01, 6:20 pm
You are both right, even disagreeing -- Fezzik -- 15 Aug 01, 1:32 am
Size your bets according the payoff, not the bet size. -- Stanford Wong -- 13 Aug 01, 6:39 pm
he really has found some arbitrage -- Math Boy -- 13 Aug 01, 8:21 pm
You can always overbet if the marginal EV from betting more is less than th -- docriver -- 13 Aug 01, 8:41 pm
Practical issues -- James -- 14 Aug 01, 11:27 am
i'm the minority -- docriver -- 13 Aug 01, 8:38 pm
hedging futures bets -- rainmandon -- 21 Aug 01, 7:51 pm
I understand the bet... -- StevieY -- 21 Aug 01, 7:58 pm
hedging futures -- rainmandon -- 21 Aug 01, 9:22 pm
I understand the bet... -- StevieY -- 22 Aug 01, 6:40 pm
Sea hedge -- Fezzik -- 15 Aug 01, 1:34 am
Oops.......I showed my Sea Bias -- Fezzik -- 15 Aug 01, 1:36 am
I'm in the same boat. I won't hedge. -- Stanford Wong -- 13 Aug 01, 8:57 am
Risk-averse betting? -- John May -- 13 Aug 01, 9:14 am
Agree -- Don Schlesinger -- 14 Aug 01, 1:11 pm
1 investment question -- Fezzik -- 15 Aug 01, 2:29 am
Attempt at some answers -- Don Schlesinger -- 15 Aug 01, 8:13 am
how much does money mean to you? -- docriver -- 15 Aug 01, 8:39 am
In-the-money options -- Jaeger -- 23 Aug 01, 6:44 pm
No -- Don Schlesinger -- 23 Aug 01, 8:55 pm
Risk-averse betting? -- lepto -- 14 Aug 01, 1:33 pm
Your bet suffered turf toe -- McNabb#1 -- 14 Aug 01, 4:24 am

 

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