#36
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Re: Teasing NFL With NCAAF
[ QUOTE ]
OK, this is the only part which confuses me - the hedging. To take a real world example, the Seahwaks/Steelers -6 (not an NCAA game but still appplicable) has a moneyline on Pinnacle of +240/-260. This implies a Steelers win pct of 71.06%. The over round is only 101.634%. So if we included this slightly +EV leg (due to limit constraints), it would be useful to hedge by betting Seahawks +240? For me, this is counter intuitive. [/ QUOTE ]Yes, in this instance it would be useful to hedge regardless of whether or not the price on 2-teamers were -110 or +100. This will be true even without betting limits. Through a partial hedge a bettor is synthesizing a shorter odds bet out of two-longer odds bets and of course ceteris paribus, a Kelly bettor will prefer shorter odds bets. This is somewhat akin to a scenario with two mutually exclusive singles outcomes, only one of which has +EV. If the market as whole is not arb-able, a bettor will only bet on the +EV outcome. If, however, the market is arb-able, then the bettor will always choose to hedge by betting a portion on the -EV. Example: 2 outcomes Outcome 1 prob = 50%, odds = +110 Outcome 2 prob = 50%, odds = -111 Kelly optimal stake ≈ 4.5455% on outcome 1 If we change the payout on outcome 2 so that: Outcome 1 prob = 50%, odds = +110 Outcome 2 prob = 50%, odds = -109 Kelly optimal stake = 50% outcome 1, 50% outcome 2 The bettor will lay half of his bankroll on the -EV bet. |
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