Sunday 21 November 2010

Think High, Lay Low

The NFL game just completed between the New York Jets and the Houston Texans was yet another example of (twice) of teams being backed in to way too short a price. The Jets had a 16 point lead, (two possessions), and traded as low at 1.03. When the Texans came back to take the lead late on, they too traded at 1.03, before the Jets won the game in the last few seconds.

Then in the later game between the Indianapolis Colts and the New England Patriots, the Patriots traded at 1.01 before a Peyton Manning led final drive looked likely to win the game for the Colts and the market flip-flopped. In the end, Manning threw an interception and the Patriots held on, but these games both provide evidence of how the price on whoever is leading is frequently driven too low.

Ian Erskine mentioned this subject on his blog yesterday in regard to football, specifically the 1.07 price at which Arsenal could be layed at half-time in the North London derby yesterday.

The picture was even rosier for me because the only solace I could find at half-time was to lay Arsenal for £200 at 1.07, not because I thought Spurs would come back at all but just it was too low a price and if Spurs nicked one then who knows, I greened up nicely with a back at 2.05 when it was 2-2, the 3rd was beyond my wildest dreams. Some of you on Twitter got confused when I mentioned my lay at 1.07, I think you thought I was backing Arsenal, I can assure you I would not back anyone or anything at 1.07, I purely did it for a chance of a trade at a risk of £14, which is a tactic I adopt quite often.
Now clearly there are times when 1.07 is value, and I would not agree with Ian that 1.07 or any short price should be avoided simply because it is short (as his comment implies), but in the in-running events that I mainly follow, the value is more often on opposing the market than on chasing the price down.

It's actually quite comical at times. A team is say 1.7 and tip-off, and they open up strongly. Two minutes into the game as they open up a lead, and the price drops through 1.6 and panic sets in. Money appears to back at 1.59, but the price drops and the same money comes in again at 1.5. It's clear that someone wants in without regard to the value. A lay at this point is often rewarded.

I have written before, more than once, about how the strategy of laying the NFL team that has just scored a touchdown (in many game situations) pays off time and again. The market wants to get on, the price is driven too low, and the market realises it and the price moves back. Put a lay in before the touchdown a few points below where it will rebound to, and if you watch enough games and price it right, you will get matched almost every time. There's also the occasional bonus of an apparent touchdown being called back due to a penalty being called, and when that happens it's a nice bonus.

But back to the NBA. A team has a run, and the market goes into free-fall, but runs don't go on for ever. One time-out, a score, a stop and another score, and the lead can suddenly be down by six. Depending on the game situation, this can result in an enormous swing in price.

I actually find these swings much easier to trade in basketball than in football, American Football, or baseball, in big part because the swing is so fast. Too much time to think can be a handicap in trading. It takes time before you can oppose the leader and hold your nerve, and it can be hard to do. The thing is though, that it's precisely because it's hard to do, that the opportunity exists in the first place. Most people feel happier to be on a leader, and will buy in at (seemingly) any price.

Mixed results in the football today. Blackburn Rovers and Deportivo came in, as did Espanyol (Football Elite) plus the strong draw at St Pauli, but only the slimmest of profits in the day. I had the strong draw in the Real Sociedad v Atletico Madrid game, but FE went for the home team. In the end, neither of us won. At 80' the draw was looking good, but no less than four goals in the last 10 minutes saw Atletico Madrid win 4-2. It was a poor weekend for FE with just one winner from four Recommended Bets, and one winner in the Short-List selections. The Bundeslayga selection was a loser (winner for us) as Stuttgart (1.56) lost 0-1 to Koln.

Manchester City move into fourth spot in the ratings, and the gap between Chelsea and Manchester United closes up. A win by two or more for United in Glasgow on Wednesday will see them go top, a fact that SAF will no doubt mention during his pre-game talk. Or perhaps not.


Nick B said...

James Wade @ 1.03 when 8 nil up in the darts when the match was only half complete is another good example.

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Anonymous said...

Wade at 8-0, off the starting prices, was actually theoretical value at 1.03. Layers got away with it.

Re: NFL. is likely a good guide to correct prices at any given time. I have no idea if the lays mentioned in Cassini's post were value or not, maybe he could input the game states and tell us what it said.

NB It effectively assumes the two teams are evenly matched which obviously isn't always the case.


Haven't looked at that for ages but i seem to remember it is possible to extract a formula to give %s at any given time. It's based on hundreds of thousands historical observations of every game state over a long period of time.

It looks complicated but it's not that difficult to put the formula in - although I'm not sure if that's quite the right page to get the info from or not.

There are also sites which provide win probabilities live during games, which are available after the game as well. Presumably based on similar principles to Ed Kupfer's workings. A google search should find them if you can find the right search criteria. Again, perhaps Cassini could report back findings with regards to the suggested lays.

It's essentially the same theory as the MLB game state charts in The Book. Although there are of course many many more game states to analyse.

Nick B said...

perhaps 'anonymous' can give a detailed explaination of how Wade was 'theoretical' value at 1.03 when 8 nil up. I totally disagree with your assertion that the layers got 'away with it'. With only half the match gone there was indeed no reason why Waites couldn't reel off 8 legs in a row!

Anonymous said...

Well, basically, the SP is set, indirectly, by what % of legs each player is expected to win with and against the throw. I say indirectly because most punters won't look at it that way. But I suppose they are doing it without knowing they are doing it if you like. And without having a clue what those %s would be.

If you assume the %s are fixed then the %s for either player which mathematically matched the SP can be used at any stage of the match to determine the odds. These %s would have had Wade at a lower price than 1.03.

It's the same with all manner of sports.

I said "theoretical" because dynamics, and hence the %s, can change during games. So the assumption the %s are fixed isn't necessarily correct. But there was nothing obvious to suggest that Waites %s needed raising. He was getting outplayed, appeared to be feeling the pressure and Wade was playing well. There was absolutely nothing to suggest such a turnaround, although it obviously wasn't impossible. You can put forward various theories, such as Wade taking it easy, Waites relaxing and starting to flow, but for every one of those theories I'm sure I could find one to contradict it. In a different situation maybe there would be a good reason to change tack.

I suppose you're right, there's no reason why Waites can't rattle off 8 legs in a row. There are many reasons why it's highly unlikely though. Not that he did anyway, he "only" won the next 5.

It was a remarkable comeback as shown by the 1.03. But, mathematically - IF THE SP was correct, which is what my argument is based on, then it seems to have been even more remarkable than the 1.03 suggests.

I'd take maths over feel every time when working out this type of price unless there is something obvious against it.

Most in running punters wouldn't give two hoots if they laid 1.02, 1.03 or 1.04 though.

I believe low odds backers do generally get the best of it across different sports purely because most people don't have the balls to do it and many people are happy to give up value to green up.

However, that said, I'm sure there are situations where it is regularly value to lay. Perhaps Cassini's US sports situations are examples of that - I don't know. That's why I pointed him in the direction of that calculator, so he can tell us the mathematical verdict.

A comment from a random punter such as yours (there's no reason why Waites couldn't reel off 8 legs in a row) is exactly what the low odds backers like to hear. It's a pretty flimsy argument for laying and shows no understanding of price. Would you have said the same if you were talking about laying 1.04? Or 1.05? Or 1.10? I don't expect you know.

Nick B said...

A random punter! How little you know! Good luck with your low odds backing anonymous.

Nick B said...

Anonymous comes across as being a complete prick!

Anonymous said...

I didn't say I backed the low odds. I didn't, it might have been value but not enough value for me.

And I didn't actually call you a random punter although it may not have been crystal clear as I think I split an infinitive or something.

And if only I did know.

Anyway, you asked for a detailed explanation. Apologies for being such a prick and delivering one.

Anonymous said...

Forgot to ask you Nick B. Could you give a detailed explanation as to why laying 1.03 was value?

Or was "With only half the match gone there was indeed no reason why Waites couldn't reel off 8 legs in a row!" the sum total of your reasoning, as well as being a great example of the joys of peer to peer betting.

Nick B said...

I'm not a punter, I'm a trader and I trade price reactions. I thrive on fear and greed and to be frank I'm not to fussed whether I lay at 1.03 or 1.10 if my models and trading experience suggest to me there is a real chance of a price reaction should an oppossing team or player make some sort of comeback. I apologise for the name calling remark and unreservedly withdraw that comment.

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