What are spreads in sports betting
- 14.08.2021
- Dara
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The value of a point can vary. In this case, we will assume that one point equals a one pence change, up or down, in the Vodaphone share price. In the U. However, while spread bettors do not pay commissions, they may suffer from the bid-offer spread, which may be substantially wider than the spread in other markets. Keep in mind also that the bettor has to overcome the spread just to break even on a trade.
Generally, the more popular the security traded, the tighter the spread, lowering the entry cost. In addition to the absence of commissions and taxes, the other major benefit of spread betting is that the required capital outlay is dramatically lower. The use of leverage works both ways, of course, and herein lies the danger of spread betting. As the market moves in your favor, higher returns will be realized; on the other hand, as the market moves against you, you will incur greater losses.
While you can quickly make a large amount of money on a relatively small deposit, you can lose it just as fast. If the price of Vodaphone fell in the above example, the bettor may eventually have been asked to increase the deposit or even have had the position closed out automatically. In such a situation, stock market traders have the advantage of being able to wait out a down move in the market, if they still believe the price is eventually heading higher.
Managing Risk in Spread Betting Despite the risk that comes with the use of high leverage, spread betting offers effective tools to limit losses. Standard stop-loss orders: Stop-loss orders reduce risk by automatically closing out a losing trade once a market passes a set price level.
In the case of a standard stop-loss, the order will close out your trade at the best available price once the set stop value has been reached. It's possible that your trade can be closed out at a worse level than that of the stop trigger, especially when the market is in a state of high volatility. Guaranteed stop-loss orders: This form of stop-loss order guarantees to close your trade at the exact value you have set, regardless of the underlying market conditions.
However, this form of downside insurance is not free. Guaranteed stop-loss orders typically incur an additional charge from your broker. Risk can also be mitigated by the use of arbitrage, betting two ways simultaneously.
Spread Betting Arbitrage Arbitrage opportunities arise when the prices of identical financial instruments vary in different markets or among different companies. As a result, the financial instrument can be bought low and sold high simultaneously. An arbitrage transaction takes advantage of these market inefficiencies to gain risk-free returns.
Due to widespread access to information and increased communication, opportunities for arbitrage in spread betting and other financial instruments have been limited. However, spread betting arbitrage can still occur when two companies take separate stances on the market while setting their own spreads. At the expense of the market maker, an arbitrageur bets on spreads from two different companies. Simply put, the trader buys low from one company and sells high in another.
Whether the market increases or decreases does not dictate the amount of return. Many different types of arbitrage exist, allowing for the exploitation of differences in interest rates, currencies, bonds, and stocks, among other securities. While arbitrage is typically associated with risk-less profit, there are in fact risks associated with the practice, including execution , counterparty, and liquidity risks.
Failure to complete transactions smoothly can lead to significant losses for the arbitrageur. Like most other sportsbooks, our point spread bets have a "juice" or "vig" of unless otherwise noted. Scale that up or down as desired. This is a proposed number of total points scored in the game by both teams combined. Over-under bettors decide whether they think the total points scored in the game will be "over" greater than or "under" less than this figure. In this example, if the Seahawks and Eagles score a combined 51 points or more, bettors who took the Over win their bets.
If the two teams score a combined 49 points or less, Under bettors win. If the total points scored lands exactly on 50 it's a push and everyone gets their bets refunded. Like point spread bets, the juice on totals is unless otherwise noted. Money line bets are all about predicting which team will win the game straight up no point spread involved. Money lines are the primary bet type for relatively low scoring team sports like baseball and hockey, and for head-to-head individual sports like MMA and tennis.
Here the Seahawks money line is Scale the figures up or down to the desired bet size. Now let's look at a standard baseball line: This baseball line looks similar to the football example, but the bet types are rearranged a bit, and the odds on the far right look like something new. From left to right, this baseball line includes rotation numbers, team names, the money line, the total, and the RUN LINE which is the baseball equivalent of a Point Spread. These lines work exactly the same way as a point spread, but they usually have adjusted juice rather than the standard juice attached to most football and basketball point spreads.
In other words the Dodgers must win by 2 or more runs. In order to cover all the primary bet types for the major sports we need to look at one more bet format: Fields. For bets with more than two competitors or possible outcomes, a Field or "Index" of potential results is presented as a list.
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Point spreads are handicaps placed on a team based on whether they are expected to win or lose by a certain margin. Oddsmakers attempt to reach a specific number line for spreads that they believe would make the forecasted final score closest to even. Spread vs. Moneyline Betting One other popular type of betting is placing wagers on the moneyline.
A moneyline wager is a bet placed on who will win or lose a game or contest regardless of spread. The payout is simply This is very different from the spread, which oddsmakers set to make the teams competing as even as possible, taking into account the perceived strengths and weaknesses of each side. A favorite will always be surrendering points, i. This basically defeats the purpose of the spread and makes it so that the moneyline is the only bet available in most cases.
What is a Spread Betting Example? The Heat are listed as nine-point favorites, drawing a spread of If the Heat win the game by more than nine points, they will be the winning side against the spread ATS. If the Magic lose the game by fewer than nine points or win the game outright, they will be the winning side against the spread. In the event that the final score results in the Heat winning by exactly nine points, i. Reading a Point Spread Point spread bets are appealing because of their simplicity.
In addition to the spread number, there are also odds attached to each spread. The vigorish, also known as juice, can be seen on each spread bet before placing your wager. This ensures that bettors are laying far less juice to make these types of bets than they otherwise would on something like a lopsided moneyline.
It can be seen in other sports, as well. For the favorite to cover, they must win by more than seven points. This means that the underdog must win outright or lose by exactly one point to cover the spread. If the Colts win by two points, you would lose the bet because they didn't hit the key number of three. The spread at -3 suggests the teams are fairly equal and maybe in this case, the Colts are only -3 because they are playing at home.
Bookmakers see these teams as equal and expect to receive fairly even money from bettors. In a spread bet, the odds are usually set at on both sides , depending on the sportsbook and state. If you like the Colts to win but think three points is a tricky number, a moneyline bet could be made on the winning team with no points in the equation. In the above example, a Colts moneyline bet doesn't have any other requirements other than they win the game. The difference is that their odds may be set at to win.
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