Betting on the stock market

As I mentioned in my last post, sports books are putting up markets for all kinds of whacky stuff and just as I suspected, there's some free money out there. Two of my books put up 'stock market specials' and there were more than a couple juicy straight up arbs, some middles, and some positions where I ride naked on. *

*(An arb (or scalp) is when there is a price discrepancy big enough that it that allows you to guarantee profit no matter what. Literal free money (as long as you get paid). For example; say you can bet on a coin flip. One guy gives you even odds, another guy gives you +105. You bet 102 to win 102 at even odds on heads and 100 to win 105 at +105 on tails. You win 2 if its heads and 3 if its tails. Add a zero or two and do this a few times a day and you're in business. Riding naked is simply taking a position, aka not arbing or half-arbing).

The question of when to hedge/arb/scalp/middle (all basically the same thing) and when not to is quite interesting. In general, hedging is good for EG (expected growth) of your bankroll while riding naked is better for EV (expected value). You used to be able to make a living just arbing tiny price discrepancies in obscure little markets by being able to move balances across dozens and dozens of offshore books using Netteller (and taking advantage of sign up bonuses/rebates). Then congress passed the Unlawful Internet Gambling Enforcement Act in 2006 which shut down netteller and made moving money around a lot harder. Plus online books got smarter.

Id advise anyone starting out to look for nothing but arbs and middles. It teaches you to really understand and value differences in price and to really fight tooth and nail for every cent/point. Also if you're in a super inefficient market and can't handicap it yourself, just take the free money if its there. Another time to hedge is when you pre-plan it. Say you find a price so juicy that you want to max it out. Lets say the line on the Pats is Pats -7.5 but you can get it at -6. You max out pats -6 for 10 units knowing you can buy back the Pats opponent at +7.5 for 8 units. So you have 2 units at risk on the Pats at the juicy -6, but you also have a nice middle where if the Pats win by a touchdown you win both bets. You can see how in this situation you want to bet as much as possible since you can't possibly lose both bets but there's a small chance you can win both. (Getting a middle that fat happens maybe a couple times a year). The best thing that can happen is when you find +EV numbers on both sides. Those are the kind of positions that you live for as a trader.

Once you get the hang of that down, you can start taking positions yourself and 'ride naked'. In the coin flip example above, you'd clearly want to ride naked. It doesn't get much better than getting plus odds on a literal coin flip. If you're trading off of a really liquid, efficient market you can feel safer riding naked. Basically, the more confidence in your position relative to the market (and assuming its a good market to gauge against) the more willing you should be to ride naked.

Ok, ANYWAY, on to the action.

Two of my books put up markets on where certain stocks will close March 31. Very interesting. It's a sneaky way to speculate in the stock market with absolutely zero fees and with ridiculous price discrepancies not only with the actual market but with each other. So let's get into it. Note: Some of these prices are widely available still so if you have any accounts Id check em out.


Amazon
o1750 -165 to win 1.25u
u1825 +140 risk 2.25u

Pretty good example of a half-arb/middle. It closed at 1846 Friday and is at 1830 in after hours trading (its so cute that the stock market "closes" by the way). With BetOnline putting under 1750 at +120, I'm pretty confident that under 1825 at +140 is the much better value so I'm more exposed to under. But you can see I have a decent chance of hitting both and didn't have to pay too much for it. I could have just rode dirty on the under but getting the 125 point middle was too much to pass up.

Clorox
u200 -155 to win 1.25u
o190 +105 risk 1.12u

Straight up middle. May have been a little too pricey to be honest. Don't love it but small volume.

Google
o1100 +120 risk 1.25u
u1100 +120 risk 2.25u

Here's the free money I was talking about. Getting +120 on both sides of the same line is so fun. It closed at 1068 Friday and is down to 1060 in after hours. Plus with BetOnline putting the under at -165, I think its safe to say the under is the right side here. So I have 1 unit at risk on the under. In hindsight I probably should have rode naked here, but this is all pretty new to me and everyone else really so I don't mind being a little cautious. I don't think any markets are totally reliable right now, even the stock market, so I erred to caution on a lot of these.

Netflix
o350 +140 risk 1.25u
u345-116 risk 3.33u

Ooo interesting, a POLISH middle. This is the opposite of a middle. I'm betting that it'll close on anything other than between 350 and 345. See this is the opposite since now theres a large chance I'll win a little and a small chance I'll lose both. It closed at 332.83 Friday and is at 331 in after hours so I think the under is the good line and I'm exposed for 1ish units on it.

Uber
o20 +125 risk 1.25u
u21.5 +110 risk 1.5u

More free money. Again, getting plus odds on not only both sides of a bet, but getting the free small little middle in there is absurd. I win no matter what and if it closes between 20 and 21.5 I win both. Sweet.

Disney
u87 -135 to win 1.12u

Riding naked here. Closed at 85.98 friday and is down a little to 85.8 in after hours. They've obviously been getting slaughtered the past month with very little bounceback. BetOnline has u90 at -180 so I think this is clearly the right side.

Costco
u310 -135 to win .75u

Closed at 290.42 Friday and is down to 288.32 in after hours. BetOnline has u320 at -170 so I'm ok with the little nibble here.

Facebook
u155 -110 to win .75u

Been in absolute freefall over the past month (as have most stocks), closed at 149.73 Friday and down to 148 (over a full percent) in after hours so no reason to think it's on its way back up.

Zoom
o125 -120 to win 1.5u

They do work for home video conference stuff and are one of the few stocks rocketing upwards over the past month. Closed Friday at 130.55 and is up all the way to 132 in after hours. No reason to think it'll reverse. BetOnline has over 110 at -175 which I think is probably a good bet too.

Walmart
u132 -160 to win 1u

It closed at 113.97 Friday and is down slightly in after hours trading . BetOnline has under 135 at -200. Don't like this bet very much to be honest but we'll see.

Ceasers Ent.
o5 +205 risk .75u

They've obviously taken a beating the last month or so but I think it reached it bottom Friday. It was as low as 3.34 last week but bounced back to 5.45 at close and up to 5.54 in after hours. Getting +205 here seems silly but I only put in .75 units just because I'm really not too sure about this stuff and it seems too good to be true. Although I felt the same way starting out this year in politics and was pissed at myself later for pussyfooting around (as good as I did/am doing it should have been a lot better). We'll see how these things do and hopefully can open it up next time if they keep offering this market.

Hilton Hotels
o50 +105 risk .75u

Closed at 61.6 and steady in after hours. Same thing as the above bet pretty much.

Live Nation
o27 +165 risk .63u

Another stock that has just been brutalized by Corona. Its up since the 18th though and closed at 33.97 Friday. Down slightly to 33.6 in after hours. Like the above two bets, its a nibble on a price that looks too good to be true in a market I am very unsure of.

That's everything for stocks. On top of everything else, I think betting these on a Sunday is optimal too since the price seem to ignore after hours trading completely. From what I can gather, after hours trading has much less volume but it's mostly done by institutions and high net worth individuals. So my hunch is that the moves are smaller but more meaningful. I'm very interested to see where these stocks close Monday.

Random stuff:

A few more random bets I have pending I'll include for completeness sake.

Brady to be on Pats 2021 -150 risk 2.25u

Made this way back in January. Obviously complete toast but wouldn't be fair not to include it.

Brady to wear #12 in Tampa
Yes -130 to win .75u

Too bad the limit was .75 units for me since this about as good of a lock as there is. Did they forget about his company, TB12?? ZERO chance he changes numbers.


So that's it for now. Nothing has settled in the politics markets since last post so nothing to update there. Hope everyone is doing ok during all this madness!