How to calculate the equilibrium for a scalping opportunity

[uva3021]

I'm asking this because I have 1x Boston +400 over Cavaliers for round 2 at 2betdsi.

What is the highest value realized for winning both bets, or in other words, how much should I invest in scalping the bet with the Cavaliers to win if the current line available is -250? How do I calculate the different scenarios of my potential ROI%?

[IrishTim]

Here's how you do it, I believe, converting odds to decimal points. I can whip up a better excel spreadsheet tonight when I have more time.

(DOG + 1)/(FAVE + 1) x FAVE = amount to bet on fave per $1 bet on dog.

So for, example given with BOS -110 and NYY +120, it would look like:

(1.2 + 1) x 1.1 = $1.152
(1.1 + 1)

If you risked $100 on BOS at -110, you'd want to risk $86.78 ($100 divided by $1.152) on NY at +120.

[Romanowski]

looks like you put 100 on +400, or 5 in decimal odds

and now you find prices have shifted in your favor and what was -500 on the cavs is now -250

theres only one scenario to yield the highest return, no matter outcome ( between the 2)

this would be different if there were more than 2 possible outcomes...

first convert to decimal odds, +400 = 5 and -250 = 1.4

1/5 = 20% and 1/1.4 = 71.4 %, this not only guides you to obtain the max profit regardless of outcome

but also tells you how much ROI youd get...in this case 20+71.4 + ROI = 100, and ROI= (100-91.4)

20% your total investment will be on the dog price in this case +400 and 71.4% on the fav, or -250....

in this case you placed 1 unit on the +400 price, as the first leg of the arb

and need to know how much to place on the fav -250.... now its easy algebra

[IrishTim]

For the record, I wouldn't scalp in this situation.

[Romanowski]

I wouldnt either, too small an ROI, now if the Celtics win again, and new odds again come out, I might

[IrishTim]

I would be even less likely to do it then. Why give up that enormous edge unless your original position was a life-changing amount of money that you couldn't afford to lose?

[Romanowski]

in all likelyhood its not life changing amounts, but id want to be paid regardless of outcome

for even having it somewhat correct that the celtics would make it a series

[IrishTim]

I guess it comes down to how conservative/aggressive you want to be. There is no way I would ever sell off a +400 if the market price on the same event is +100 (just a complete guess of what it would be at 2-1 Boston). You're getting the payout of something that has a 20% win rate for the price of something that wins 50%.

[GFootsXtreme]

Originally Posted by IrishTim

I guess it comes down to how conservative/aggressive you want to be. There is no way I would ever sell off a +400 if the market price on the same event is +100 (just a complete guess of what it would be at 2-1 Boston). You're getting the payout of something that has a 20% win rate for the price of something that wins 50%.

I agree here. To put it another way, you don't bet on a "longshot" and then try and hedge it. The whole point of a longshot is to get a big payout.

If you had a big wager on a future that was a favorite and they were doing well but you had a sense things could turn, then it makes sense.

[Romanowski]

uva asked the math behind determining, a ROI, regardless of outcome

as for whether to scalp it, and go through with it, thats a matter of opinion

if you had a very long shot, say New Orleans to win the NFC, last year, as I did, 15-1

they go through all the tribulations, and are in the NFC title game....

you wouldnt want to show something for it, in the event they lose the game?

in other words its getting paid, for being at the very least almost right...

I ended up deciding to take a 1/3 of the potential in the 15-1, and putting it on Minnesota +3.5

which wasnt the same payout, regardless of outcome, it still leaned toward the saints

and in this case it worked quite well as NO won, but MN covered 3.5...

I dont see any problem in locking some sort of ROI in regardless of outcome

especially on a longer shot, that has one more leg to complete...

it all depends on the situation of course...but now anyone reading should know how

the when is another story

[IrishTim]

I guess we just see things different Romo. If I have 15-1 on an event that is 40% or so likely to occur (Saints winning the Super Bowl vs. Colts), there is no way in hell I sell off of that. I know that I would make a lot more long term sitting on it then giving up a piece of the huge advantage I have gained.

[Romanowski]

how can you distribute a 15-1 payoff with a 40% chance though?

that doesnt happen often enough to play it as if you have a large sample

I do see your point, but I look at it differently, its a future with a life cycle

if it gets to the final game, at that point its payoff was actually less than 1 to 1 (the market at the time of the game)

they were favored in the NFC title game

why not be paid at that point? essentially for correctly prognosticating their value before the market did

in the example above, I only took 1/3 of the potential 15, 5 on MN +3.5

in the very least I win 5, but could 10, and did 20, the 5 for correctly determining the value in the value in the saints, preseason

why not? youre right its a matter of opinion, I want to be paid for even being close

and the life cycle of my future wagers are usually long, I try to get the most value out of them

of course nobody is always right, but you can improve your chances of getting the prop at its height with analysis

in this example saints never had a better # throughout the season as they started out the gates hot

right now I have suns to win nba at 66-1 and the west at 30-1 :)

boise st to win the bcs championship at 20-1 too

I also lost west virgiana to win ncaab at 20-1 which I never hedged

[IrishTim]

It doesn't have to happen often enough to do an analysis, you can just use the market prices. If the moneyline for the Saints to beat the Vikings was -205, that means you have a 67.2% of cashing a +1500 ticket. That's insane value. I would take that ever single time without hedging. Sure, you can lock in a profit and be happy but over a larger sample, you're statistically likely to win more by not selling off of a huge +EV position.

[IrishTim]

A better spreadsheet I just whipped up for scalping. Some of the other tabs are ones I've picked up over the past year or so.

[Romanowski]

appreciate that Tim