Insure your trade, or take the risk???

For those who are not from Britain, and for those who don't drive, Fully Comprehensive and Third Party Fire & Theft are the most common types of motor insurance available here in the UK. Fully Comp, as the name suggests, will pay out for almost any claim (as long as you're not on drink and / or drugs!). TPF&T, again as the name suggests will only pay out in the event of your car being written off or damaged through fire and / or theft. If you just tale the risk, and drive with no insurance cover you won't get anything if you crash except a spell in one of Her Majesty's jails!

The analogy to soccer trading is a good one, as all three levels of cover are possible, and, as with car insurance, the better the cover, the higher the premium!

By way of explanation have a look at the spreadsheet below:

You will see that if the game ends 0-0, 0-2, or 1-1 I would have 100% cover on those scorelines - i.e. my total stake would be covered - no gain, but, as importantly, no loss! If it finishes 2-3, 3-2 or 3-3 I have 'purchased' partial insurance on those scores. If one side runs away with the game and scores 4 or more goals and the Any Unquoted score comes in I'll lose my entire £100 as there is no insurance in place. Any other score wins me £18.64. Obviously if I were trading this game I would adjust my position as the game goes on, but you can see that I can reasonably well manage my position by placing 'insurance' bets.

Trying to cover all 17 correct scores is not the best way to trade that market, but it serves as a simple example of what I mean. There are several other methods of insuring a position and I'll cover just two of them here.

Lay the Draw

A simple strategy that enables you to benefit from either side winning a game. Obviously you lose if the game ends as a draw - so what can you do to protect your investment? One way is to cover some correct scores - 0-0 and 1-1 being the obvious ones... The degree to which you insure your liability is up to you. If you lay the draw for 100 at 3.5 your liability is £250. If 0-0 is at 10 and 1-1 at 8 you could cover both with total stakes of around £73 or cover just 0-0 for £28. It then becomes a value issue - how likely IS the game to be drawn - or another way - how likely is the 0-0 or 1-1 result? I can't answer that, I'm afraid! That's where your skill at assessing matches comes into play.. but by tinkering with the figures you can 'buy' yourself some protection at the cost of smaller winnings if your initial strategy was a good one.

Correct Score Trading

If you think a game is going to have few goals, why not back 0-0, 0-1, 1-0 and 1-1? You can protect that investment by backing over 1.5 or over 2.5 goals. If you think the reverse, go for a back of the higher scores and insure by backing under 2.5 or under 1.5 goals.

 Remember, you don't have to go for fully comp insurance - what I try to do is to say to myself 'I am prepared to lose £x on this trade' - and take insurance appropriate to that figure. Have a tinker and good luck.