I've been trading football on Betfair for some years now, and I've often thought that after a goal the price on 'Unders' drops more quickly than the price on 'Overs' rises only to dismiss it as an optical illusion. For those fans of low liability laying, liabilities don't come much lower than in the Over 1.5 market after an early goal has been scored and I've quietly made a few quid doing just that lately. I've also lost a few quid but that's not the issue right now! And I became more convinced than ever that unders drops quicker than overs rises - and - after thinking about it - reckon I know why.
In the premier league season 2010-11 80% of all matches had 2 or more goals, so an early goal leaves the Over 1.5 at very low odds. To see what this means have a look at the chart below. Let's assume the market settles at 1.1 to lay overs, and 11 to back unders. I've reversed the odds of the unders so that they correspond to the overs odds to give the closest to 100% combined implied percentage chance on both sides of the market.
The yellow boxes represent a perfectly matched market, with the implied chances adding up to exactly 100%. Notice that as the price rises on overs and falls on unders that the figure tends away from the perfect 100%. This is because on Overs at this point the tick increment is .01 whereas on unders it is either .5 or .2 on the prices shown.
The two red figures represent a £100 liability on both sides - i.e. a back of unders for £100 at 11 or a lay of overs for £1000 at 1.1. The two green figures show the hedged 'green' resulting from a one tick move on both markets. The astute trader would rather lay then back on those figures....
Or would s/he? Let's have a look at what actually happens. Imagine my surprise when I logged onto my trading PC on returning home from work to see the gooners 0-1 down at home to the mighty Shrews! Ignoring any personal preferences a Chelsea man has for the discomfiture of our North London rivals I thought this match might illustrate my thoughts perfectly, and so it proved! The screenshot below shows the 1.5 goals market after the goal:
Notice two things... firstly the market really does expect at least one more goal! I was able to back a tenner at 25 on unders! You can see my hedge lay already in place at 18.5. Secondly look at the discrepancy in the amounts waiting to trade overs compared with unders! I haven't added it up properly but it looks to be about £400 on unders and £15-16k on overs! This makes no sense really.... if you are convinced a second goal will come your back is sitting the queue at 1.05 or 1.06. You stand a good chance of a goal occurring before your back bet is matched! The brave soul who laid my £10 at 25 stood to lose £240 if there was no second goal, but he definitely got his lay matched!
This next screenshot was taken about three minutes later...
You can see my lay hedge has been matched, I'm the price of a pint ahead of the game, and overs has moved just one tick!
Human nature seems to move us in the direction of betting on something that we think WILL happen. So, with the above 80% stat in mind punters and traders alike back O1.5 at the start of the game, even though it is usually at an odds on price. With a goal early on the traders look to lay their backs off and secure a green book, free their cash up and go off in search of other opportunities. At 0-1 with over three quarters of a match between a premier league team and a lower league team many more punters will pile in with a straight back. The result is this log jam on O1.5 which will take time to clear. Watch these markets, in a big game (and with respect to Shrewsbury, this wasn't a BIG game!) you will see many thousands of pounds getting matched and queuing to be matched on overs.
In the meantime you'll see people like me over on unders sometimes nicking 5 or more ticks in the time it takes overs to move just one! The bigger green on a one tick hedge on overs doesn't now have quite the same appeal, does it?
I've said before that I'm not a mathematician, and I'm sure some people will correct my interpretation of the figures... but I know which way I'm going in this trade in future - all in favour of the larger tick size, quicker matching times and a fast buck!
I think it's only fair to end this post with a wealth warning....
"BACKING UNDER 1.5 GOALS, OR LAYING OVER 1.5 GOALS AFTER ONE GOAL IS SCORED CAN RESULT IN FINANCIAL LOSS! YOU HAVE BEEN WARNED!!!"
The thing to remember with these markets is that Betfair uses cross matching, so the market is traded as a whole meaning that money traded on one side of unders/overs may actually have been placed on the other side. Your software is not showing the money that is available and it is wrong to think that you will be able to get in and out of unders independently of the money on overs.
ReplyDeleteIf after a goal the 1.5 market settles at 1.09 on overs and you lay with a liability of £100 £1111.11 will be placed in the market at 1.09 if it is matched and you wait till the market hits 1.29 and green up you will back 938.84 and end up with £163.65 green on both outcomes. Or you back unders at 12 with £100 and wait till unders hits 4.4 and green up laying £272.73 and end up with £164.08.
Both outcomes are pence apart but it is only the other half of the same market in which you only had £100 at stake if there was another goal, and I agree it appears that unders has dropped faster but mathematically nothing strange has happened.
I enjoy reading your blog and your banter in the room during matches.
Took me ages to write all that lot :-(
ReplyDeleteSeriously, I didn't think that ALL markets were cross matched - only some. If that's the case then it renders my post a bit pointless!
I stand by the comments about human nature and punters though!