Re: Likely dumb vig question
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Since the relationship between the price and its associated probability is not linear the mean of the two prices is not the mean of their associated probabilities. So no you cannot just take the average of the two.
For each price calculate the associated probability and then take the mean of those two probabilities and translate this back to a line.
Probability asssocaited with -300= 300/400=0.750
Probability associated with -240= 240/340=0.706
(.75+.706)/2=.728
Line= 100*.728/(.728-1)=-268 (versus -260 by just taking the average)
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Ty for the work, but wouldn't the "average" be -270?
Can I also infer that the neg side will ALWAYS need to be a bit lower?
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