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This is not a true a overlay. An overlay would be if there were 3 horses or dogs,
one of this combination, had a 90% probability of winning. Therefor, of all the
animals running, one of these three was most likely the winner. Then you take the
odds on each animal and allocate the amount of your bet on each animal so that no
matter which one wins you are profitable. The same is done in trading using
options and the underlying. No matter which way it goes you are a winner. Ira
BOTTrader@xxxxxxx wrote:
> Speaking of gambling, and the Racetrack Betting Book..... I used to go to the
> West Palm Beach dog track for fun. While you really are unlikely to come away
> from such a place a consistent winner over time, it's fun and there are
> important corrallaries to trading. Well, anyway, there was a dog track
> betting magazine that I found fascinating.... some guy was writing a series
> of articles on a concept called "overlay betting"..... the basic idea that
> you wait to bet on situations where the Real probability of your horse/dog
> coming is much better than the pari-mutuel betting odds reflect.... EXAMPLE:
> 1) You determine your horse/dog has a 1 in 3 chance of winning based on your
> handicapping, but the payoff odds are 6 to 1, 7 to 1, etc. That's an
> Overlay... on the other hand, if the payoff is 3 to 2, even if your horse is
> likely to win, the bet is terrible. Again, gambling is so rich with
> corrallaries to trading....I'll save you the story about Blushing John and
> Sunday Silence at the Breeders Cup.... my proudest overlay bet at the track :)
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