Re: $0.25 / $0.50 PLO home game, flop action makes me sick
Seeing as you are holding two of your own outs and no other redraws, folding here is probably best.
It is very easy to overesimate your equity in these spots, especially when the effective stacks are not equal. You wouldn't really mind getting all-in 3-way for 40 each, but you don't want to call MP1s bet and then get raised all in by UTG (who would presumably have the nuts) and be a big dog.
The situation you would hate pass up though, is if UTG is playing something like a naked top two and is willing to get it all-in on that flop. Here you would be a big dog for the main pot, but a huge favorite for the side-pot. But, unless he is a total donk, this situation isn't going to happen all that frequently.
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