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  Spread Betting -
explained |
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| Spread Betting is both innovative and old. It has taken the age old
philosophy of market trading and combined it with modern thinking towards
sports betting and financial indices. In reality the bets are very simple to
understand but their implications to the gambler are often complex. Some terms
put off the casual or traditional punter but it is simple. Here we try to
explain. There is a short glossary of terms. Remember
that Spread Betting is volatile intentionally to give a wide range of possible
outcomes that the Spread Firm can more readily judge than the average punter.
You must be better than the average punter. Most of the time the results will
be sensible but just occasionally they will be extreme. Always consider the
extreme case when betting and bet within your limits. |
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The Single
Index - The simplest form of spread betting is the Single Index.
What defines this type of Index is the fact that it is independent of all other
scores and events. Let us take for example a cricket innings score. England are
playing India in a test match and Hussain is quoted at 85-90 for his two
innings combined run total. The final result (make-up) of this index will be
his real combined two innings total.
[Example] You think he is strong and
likely to score more than 90 so you Buy at 90 for £2.
Lets look at two cases:-
(1) Hussain scores 52 in the 1st innings and 78
in the 2nd innings. His total (the make-up) is 78+52 = 130. Your result here is
(130-90) x £2 or another way of saying you win £80.
(2) Husaain
scores 37 in the 1st innings and 0 in the 2nd innings. His total (the make-up)
is 37. Your result here is a loss because he scored less than 90 and so is
(90-37) x £2 or another way of saying you lost £106. |
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Heads-Up Index - With the Single Index, the make-up was
determined by the actual result in real life. With two player indices the
Spread Betting Firms often (not always) like to spice things up by awarding
points for a particular result. For an example lets examine an 18-Hole match-up
between two golfers in a tournament. This is an index that is resolved in one
day.
Its Mickelson vs. Els in The Open on the first day. A spread firm
quotes Mickelson/Els 0-3 and the rules are 10 points for a win and 3pts per
stroke advantage in the actual score result. So if Mickelson beats Els by 3
strokes the make-up will be 10+(3x3) = 19. But if Els wins by 3 then the
make-up will be
-10 - (3x3) = -19. Its negative because
Mickelson is first quoted due to being deemed favourite by the firm. (You
have to get used to negative numbers in Heads-Up events).
If you made a
Buy at 3 for £5 (thinking Mickelson would win) and he won by 3,
your win would be (19-3) x £5 or £80. If he lost by 3 strokes your
loss would be the difference between 3 (the Buy price) and -19 (the
make-up). So you lose 22 x £5, or -£110. (Mathematically its 3 -
(-19) = 22)
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| Table A |
| World Cup Group |
| Team |
Quote |
| Argentina |
13-15 |
| England |
10-12 |
| Sweden |
6-8 |
| Nigeria |
2-4 |
| 1st = 25pts, 2nd =
10pts |
Multi Player Index - These are presented
as several players/teams competing in their own seperate market. Sometimes, as
in football World Cup groups, all the teams in the event are quoted. For the
rest just a selection of teams/players are chosen, as in London football clubs
in the Premier league. Regardless of these choices, spread firms allocate
points to the finishing positions within the specific
selections.
Example:
In the Table A on the right is the 2002 England
World Cup qualifying group. Points will be given to the winner and runner-up,
3rd and 4th get nothing. You must use your judgement to see whether the point
spread quotes are value to you as a punter. The abstract nature of this kind of
index is what makes it hard to judge but the Spread Firms have developed ways
to understand them. If you trust your judgement and think they are out of line
then bet.
In this case, if you think Nigeria have no chance then your bet is
Sell at 2 for £5 (maximum risk is if they come first you
lose (25-2) x £5 = £115). You also think Argentina are certain to
win the group (second will lose money on a Buy) so you Buy
at 15 for £5.
| Table B |
| Result |
| Pos |
Team |
Quote |
| 1 |
Sweden |
25 |
| 2 |
England |
10 |
| 3 |
Argentina |
0 |
| 4 |
Nigeria |
0 |
The finishing positions and final points
allocated (the make-up) are shown in Table B. The Sell bet
on Nigeria wins (2 - 0) x £5 = £10. The Buy bet on
Argentina lost (15 - 0) x £5 = £75. The two bets combined lost
£65.
Advice With this type of
index it always a matter of judgement as to whether the quoted price represents
value to you as a customer. Argentina may have looked favourite to win the
group but would they win enough times if they were given 100 attempts, to let
them average a score of more than 15 points. If yes then its correct to
Buy, if they average in 13-15 zone then its neither a Buy or a
Sell. If they would average less than 13, then its a Sell. |
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| Glossary of Terms |
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| Buy |
This does not mean purchase in the conventional
sense. It means you are betting that the higher value of a quote will be
exceeded.
e.g. Lara cricket innings runs 40-45. You buy at 45 in the
belief that Lara is likely to score more than 45. Your win is his final score
minus 45. Thus if he scores 98 your result is a win of (98-45) x £stake.
If he was out for 28 your result is a loss of (45-28) x £stake. In these
cases if you staked £1 you win £53 in the first and lose £17
in the second. |
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| Sell |
This does not mean selling something you already
own in the conventional sense. It means you are betting the lower value of a
quote will not be reached.
e.g Lara cricket innings runs 40-45. You think he
is out of form and Sell at 40. If he is out for 2 you win (40-2)
x £stake. But if bats well and hits 67 then you lose (67-40) x
£stake. In these cases if you staked £1 you win £38 in the
first and lose £27 in the second. |
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| Spread |
The difference between the Buy and
Sell prices.
e.g. Lennox Lewis K.O. Rounds 4-5. The
spread is 1. |
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| Mid Point |
The point value exactly between the
Buy and Sell prices. This may be used as the
make-up of a market when an event is stopped prematurely or there is a
withdrawl. |
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| Make-up |
The point value attributed to a
player/team/fantasy-index at the conclusion of the event. This is the value to
calculate your final win/loss with from your Buy or
Sell position. |
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| The Single Index |
One player index, not dependent on another score.
e.g. One cricket batsman's total run score in an innings. |
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| The Multiple Index |
Several or many players/teams competing in an
event chosen to create a market. The highest player/team at the conclusion is
awarded the highest point value to calculate the resultant win/loss. The second
place is awarded a lesser point value to calculate the win/loss. variable on
the number in the market. There may be more places paid with lesser
values. |
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