Saturday, 13 June 2015

Low Risk Play

As I have written before, one of my baseball strategies is to take advantage of a price which is slow to respond to the withdrawal of a starting pitcher.

Clayton Kershaw is rather a good starting pitcher for the Los Angeles Dodgers, with an excellent record versus last night's opponents the San Diego Padres, and consequently the Dodgers started at ~1.51. (Kershaw's numbers are actually down this season on previous years, but he's still pretty good!).

I've also written before (somewhere) that 1.51 or thereabouts in baseball is less like to offer value in baseball than it might in most sports, with several studies showing that reverse favourite-longshot bias exists in MLB, and has done for many years:

In contrast to the consistently observed favourite–longshot bias found in racetrack betting markets, it has been shown that gamblers in the market for Major League Baseball games reveal the opposite behaviour.
The strength of the reverse favourite–longshot bias is virtually identical to the original paper. The result suggests that, contrary to most reported inefficiencies in gambling markets, this bias appears to be permanent.
Anyway, while I'm usually waiting until the sixth innings or so before the starting pitcher is pulled shortly after throwing a little over 100 pitches, in last night's game ace Kershaw was whacked on the hip by a sharply struck liner (estimated 107mph) in the first innings, and the possibility of an early departure triggered a lay. In the event, Kershaw stayed in the game, took a 2:0 lead and traded as low as 1.07 before the Padres came back in the 7th to take a 3:2 lead. Time to green up:
Although the Dodgers ended up winning the game 4:3, these kinds of opportunities are why I find trading the less popular, less understood, albeit less liquid, sports so much easier to find an edge in than the more popular sports, and yes, I did make a tad more than the above screenshot, which was taken after greening up rather than levelling up.

Had Kershaw indeed been unable to continue, that 1.51 goes out, or should go out, of the window, but even if he stayed in (which he did for several innings), the bet isn't a bad one anyway. Kershaw walked 6 batters suggesting that he wasn't 100%, and it was unfortunate that the San Diego Padres couldn't take advantage of those walks. The worst that could happen is what the market had already priced in - low risk, high reward.

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