Selling naked shorts, where are my pants?

-

 

Q:   If Mr WolfLine says that the sports betting equivalent of BUYING (getting long) an At the Money naked call in options trading is betting  Team A Against the Spread and betting "the over" in the totals market,  then what would it translate to in options trading if I still wanted  to bet Team A against the spread BUT wanted to bet "the under" in the totals market

A: To establish this  position, the trader could either SELL (get short) a Team A At the Money naked put or SELL (get short) a Team B At the Money naked call.

IMPORTANT:   This is theory.  In the real world, most retail customers  are not  permitted to sell naked options (options not covered by either  another  option or the underlying stock...which we will get to later)  because of  the risk potential/margin requirements.  The most that can  be lost when  buying naked options is only what is paid for them and the  profit  potential is unlimited for naked long calls and unlimited down  to 0 for  naked long puts.  When selling naked options, the most that  can be  profited is the cost of the option received by the seller if the  option  expires as worthless, but the risk potential is unlimited for  naked  short calls and unlimited to 0 for naked short puts.  However,  since we  are applying these theories to sports betting, which are   binary/barrier/all or nothing options, then it is permitted to do so   with predefined risk.  At the expiration of contracts, end of games,   etc. all options/bets will either be 100 Delta (probability of winning)   for calls, (-100) Delta for puts, or 0. An "Against the Spread bet"  made  before the start of the contract, game, etc will have a   Delta/probability of 50/(-50) with the spread being the strike price.    So if you are an options trader that has been wanting to sell naked   options, TWL sports betting securities markets is your chance. 


Comments

Post a Comment

Popular posts from this blog

TWL White Paper: Options, the Greeks and Sports Betting.

-
Image
  How to Navigate the Structure of a Probability Priced Sports Betting Exchange Platform by Using Options Theory/Application and Greek Risk Variables A probability based sports betting exchange is predicated on the buying and selling of probabilities (just like it sounds) of pre-game/contracts and in-game/contracts. A "sports bet" is the same as an options contract and is composed of underlying price (the score of the game), the strike price of the option (the point spread or total of the game depending on the bet), the time remaining in the contract (time left in the game, half, etc.) and implied volatility (the total expected scoring remaining in the contract). From this point forward, the contracts will be referred to as "the game" (obviously there are also bets to be made on halves of games, quarters of games, etc. just as there are weekly, monthly, quarterly and LEAPs options and the same adjustments would be applied). It is very important to ...
Read more

Ever think Sports Betting and "Wall Street" were the same?

-
Below is the answer, and why You are right. We will make the assumption You have some basic understanding, if even only from a movie or quick news story of Stock Options. We will clarify as best we can about all the similarities. In sports, the strike price is the pointspread, the stock price is the score of the game, the time left to expiration is the time duration of the bet and the implied volatility is the total. Since there is no score before the game starts, a pre-game bet will always be an "At the Money Option". This can change throughout the game as the score changes, the time left in the contract/game changes and the implied volatility/expected amount of scoring/total changes. As with stock options, if you "buy points", that is the same as buying an "In the Money" option which will cost more because the bet now has intrinsic value. Vice versa for selling points. An options contract is made up of stock price, strike price, t...
Read more

Sports, Stocks, how do I analyze?

-
Image
TheWolfLine and Technical Analysis for Sports Betting Through Gamification...The ONLY Game in Town It is accepted that there are only 2 ways to analyze an asset in a marketplace in order to measure the market price of the asset relative to the actual value of the asset to decide what to buy, what to sell and when... Fundamental Analysis- Completely irrelevant because once the fundamental information becomes known to the public, it is then "baked into the market price" and does not matter. A guy named Eugene Fama won the Nobel Prize for Economics for this a few years back for something called "The Efficient Market Hypothesis". The only time that fundamental information has any value is if it is not known by the public/the market, but if that non-public information is profited from then it is a violation of SEC rule 10b5-1 and you can go to prison..and you don't want to go to prison. The irrelevance of fundamental analysis has recen...
Read more