Monday, 5 April 2010

Boston Trading Party

Baseball is back, but it's not football.

In football, if a team leads 5-1 after 35 minutes, 1.03 is usually a generous price, but in baseball, a 5-1 lead with a little over one-third of the game gone, 1.03 is most definitely not value.

The just-ended Red Sox v Yankees game saw a decent amount of money traded at 1.0x (see screenshot) when the underdog Yankees led 5-1 in the top of the 4th inning, but as anyone who has traded baseball knows, those are crazy prices to be backing at.

The price in many sports is often driven lower than it should be in the immediate aftermath of a significant event, or when a team seems to have all the momentum, but when the inning is over, or there’s a timeout, the momentum often comes to a halt, and the price that has been driven so low by greed bounces back as the fear kicks in.

The forum opinion was that the price was way too low:

Theres been some crazy I/R prices here, big stacks at strange times b4 at around 1.03/04
Fear and greed drive the markets. The Red Sox came back to win 9-7. A pleasing result for the person lumping on Boston with £20k with the game still scoreless.

It was a good day for trading in the city of Boston. Earlier, in the NBA, the Celtics led by 22 against the Cleveland Cavaliers (trading at 1.01) then fell behind before rallying to win by four.


Anonymous said...

I don't bet on baseball, don't watch it and know very little about it.

But I do know it's a sport which has a distinct "state" at any stage of any game. And from the innings number, outs and players on base it's easy to find a figure for what the win % would be based on historical data. (assuming the teams are evenly matched. I suppose you can tweak things from there to adjust for team strength).

Cassini is correct. The 4 run advantage in the top of the 4th certainly doesn't seem to merit a 1.03 price - an average team away to an average team who were 5-1 up during the top of the 4th even with no men out and the bases loaded only win 93% of the time.

If they are at the start of the top of the 4th, up 4 with no men out it's more like 86%.

I recommend a book called "The Book" for quality analysis of baseball. I've taken those figures above from "The Book"

Anonymous said...

To Anon,
(1st Reply)
For knowing 'very little' about baseball, you seem to have learned a lot from "The Book" in so short a time from one sentence to the next.
Any other "books" from the same author on other sports?
Or are you 'The Author'?


Anonymous said...

No, I'm not the author - there are three authors in fact, all leading analysts in their field. I make a point of reading as much literature as possible which I think may help in sports betting, whether it's to do with a sport I personally bet on or not. Even if I can take one point out of any book then it's worth the price.

I tend to avoid US Sports betting due to the time difference and also the fact that the markets are extremely mature and efficient. I would suggest they are far more efficient than markets on non-US sports. There have been many more academic studies on US Sports than others and I believe general value will be minimal at best.

That said, I don't doubt there are in running opportunities but I simply can't stay up all night every night to take advantage so choose to swerve it and concentrate on other sports.

And, yes, I am the anon Cassini likes to believe is bitter, twisted and jealous. As a different anon posted recently, it's perhaps worth taking on board some of my points. I'm simply trying to point out errors / oversights he may make in his attempts to lead his readers to value.

Anonymous said...

No, I don't believe there are any other books by the authors but one of them has a lot of high quality material on the internet (Search Tango Tiger Baseball).

Another has a very interesting website - extremely mathematical - based on his ratings systems (search Andrew Dolphin ratings).

Anonymous said...

So a good day for trading is when there are big comebacks.

Seems a little simple. Is 1.01 a blind lay?

Is 1.02 also a price to lay blind?

When do traders decide the comeback isn't on?

The Rev. All Green said...

hi, brother Green.
Could you add me to your blogroll pls ?