Relegation & promotion markets and over reaction
I’ve been active in the promotion and relegation market for a few years now, but this year is a good example of why.
I’m always amazed at how volatile the market can be throughout the season. This year looks like an interesting year at the top, but I hadn’t imagined just how much prices would fluctuate so early in the season. I’m mean it’s only just started and yet people are heavily discounting something that won’t happen till next May.
Four games into the season Liverpool fans were talking about how they were in with a shout of the title, but a defeat to Southampton kept things in check and despite coming in from 30’s to 10’s they are back out to a more realistics 15-20’s at the moment. Everton were given no chance with the departure of Moyes but now have come in after an unbeaten start to the season. Man Utd are predictably the main sufferers in the ‘big four’. They traded at lows of evens for the title but have been on a steady drift and now sit at 8’s. The blue half of Manchester have fluctuated quite a bit as people try to adjust to the new era but, mainly thanks to results elsewhere, are more or less where they started. Chelsea have drifted a bit after an uncertain start. But it’s Arsenal that are slowly coming up the side virtually unnoticed alongside the media circus focused on the three new managers in the top four.
The thing about all these moves is that there is still so much of the season left and another transfer window. I wrote in previous post about the key determinants in settling league position and they are still in place, even if the exact order is undetermined. But it’s far to early to rule anybody in or out of the race. So backing at decent prices or laying at low ones will most likely result in a profit at this stage.
At the bottom some key candidates are emerging, but it’s the usual suspects. Despite Hull’s lofty position they are still in the mix according to the odds and only a very long run will see that situation change. I suspect they will follow the path of Blackpool a few years ago who looked like they could escape only to get found out in the second half of the season. Sunderland look a good lay to avoid relegation after their disastrous start. The management probably acted at the right time to start the turn around. The next manager market has been useful, but I could do with Gus Poyet not getting the nod.
So, with only a fraction of the season gone there is almost certainly value in a number of prices across the market. People tend to discount new information too soon and there is a lot of the season left. Either that or Southampton will qualify for the champions league, Sunderland get relegated, Man Utd finish 12th and Hull be knocking on the door of the Europe league. That would make for an interesting end to the season!
Category: Football trading strategies
