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What did i do? please help figure my Steelers-Ravens risk

Let’s see how good we are at handicapping math. On Wednesday night I laid three stacks of high society on the Ravens at -3 (+110). Late yesterday afternoon, I learned that I may have serious cash-flow issues as a big customer of mine will file chapter 11 and beat me for $1.35mm. So I have no choice to scramble. After a long sleepless night I turned around this morning and hedged my bet by taking the Steelers at +1(-105). Because I like round numbers I bet $31.5k on the Steelers in an attempt to lower my risk.  Did I do the right thing?

In this case it was a tough call, was I better just letting the $30k ride? I hedged my bet by taking the Steelers but it was not a perfect hedge, I am still exposed. Please do the math and let me know where I am exposed and by how much.

While this is a fictional scenario, believe me I wouldn’t give a shit about writing on BTSC if I was facing a $1.35mm loss. But a scenario very similar to this actually happened to me a while back, so I know it is possible. If you are unfamiliar with spread betting you may refer back to my recent post for a more thorough explanation, click here:  Spread Primer  hope you enjoy figuring it out and putting my mind at ease, have fun!

 

 

[Note by kk99, 09/11/11 8:42 AM PDT ]

below is the answer to my question, since no one wanted to do the math:)

 

So, if you didn’t already guess, a stack of high society is $10k so I bet $30k on the Ravens. Therefore, my total bet is $61.5k ($30k on Ravens & $31.5k on Steelers). Now, I started with the Ravens not because I like them but because the odds were so much better. I had no vig on the Ravens but I would have had to pay $30 vig on every $100 on the Steelers. Too much vig is always a bad idea, so I bet the Ravens giving 3 points and hedged by betting the Steelers +1. These are all my possible outcomes:

 

  • Ravens by 4 or more points – my payout is $63k, win $1,500.
  • Ravens by 3 points – push Ravens bet ($30k refunded) lose Steelers, lose $31.5k
  • Ravens by 2 points – lose both bets and am out $61.5k…. OUCH!
  • Ravens 1 point – push Steelers bet but lose Ravens bet, lose $30k.
  • Tie game or Steelers win outright – win $61.5k on Steelers, breakeven.

 

So my real exposure is the Ravens winning by 2 points. It would have been better to find odds closer to the 3 points. Had I found odds at Steelers +2.5 even if the moneyline was slightly worse I would have been exposed only if the Ravens win by 3 points. I would push Ravens, lose Steelers for a $31.5k loss. That would have been a much smarter move. Had I been able to get Steelers +3 then I would have only been exposed by the amount of the vig on the Steelers above $10 per $100. Were I able to bet the Steelers at +3 (-105) then I would have had an +EV bet and at least broken even if the Steelers won or Ravens won by 3 or less points. And I would have made $1,500 if the Ravens won by 4 or more points.

This is very similar to options trading and you can make a lot of $ if you are very disciplined and pick your spots. most of the time you pass but once in a while there is a great opportunity and you go balls out. Problem is that most people (including myself) are impatient and they cannot wait for the right opportunities.

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