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.