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Old 11-30-2007, 07:30 PM
Daliman Daliman is offline
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Join Date: Sep 2002
Location: Wongs are two things, (at least).
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Default Re: Likely dumb vig question

[ QUOTE ]
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)

[/ QUOTE ]
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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