Trading correlated win markets
Last night we were presented with a good opportunity to trade a correlated market and it’s a favourite trade of mine.
Leeds were playing Chelsea and the opportunity was to oppose Chelsea without actually betting against them. This is because we were in the latter stages of a tournament. It’s important to note that this tactic only really has any logic when matches are taking place on different days.
In the latter stages of a tournament a red hot favourite isn’t far away from the ‘true’ price you would expect them to be in the next round. This is because the chance of qualifying to the next round will always be higher than the chance of them winning an individual match. In this case, if you want to expose yourself to potential upside, back the second favourite in the tournament win market if they have already qualified. If the red hot favourite goes through then you lose a little as the expected progress happens. If the team you are effectively opposing slips up though, then you can cash in your primary position for a profit. Last night Chelsea fell behind and that would have been good enough to cash out, better if they had lost. In the event of a slip up the market has to shorten the price of the nearest competitior and that’s where you can profit.
The captial one cup wasn’t really the best tournament to do this in, as the liquidity is lousy. But it is useful in that many top teams get knocked out by fielding weaker teams. Any knockout competition when key results are decided on seperate days are useful places to deploy this tactic. It also helps if there are not many matches left, as this will help you model the remaining outcomes.
In the new year we have several knockout competitions spring to life, so park this tactic and look to revisit it then.
Category: Football trading strategies, Trading strategies
