Binary Bets

This is a discussion on Binary Bets within the Fixed Odds & Binary Betting forums, part of the Markets category; When I switch between binary and decimal pricing modes on the betting site I use I notice that the spread ...

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Old Feb 27, 2006, 8:41pm   #1
 
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Question Binary Bets

When I switch between binary and decimal pricing modes on the betting site I use I notice that the spread in binay mode is approximately 6 points and in decimal mode the equivalent spread is 0.2. This represents a 12% spread for the binary price and a whoping 20% spread for the decimal price! I cannot understand how this difference can be justified for what is effectively nothing more than a different way to display the prices?
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Old Feb 28, 2006, 12:36am   #2
 
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Quote:
Originally Posted by Hunter99
When I switch between binary and decimal pricing modes on the betting site I use I notice that the spread in binay mode is approximately 6 points and in decimal mode the equivalent spread is 0.2. This represents a 12% spread for the binary price and a whoping 20% spread for the decimal price! I cannot understand how this difference can be justified for what is effectively nothing more than a different way to display the prices?
You can't use the absolute difference to calculate spread for decimals odds, e.g. 1.01/1.04 vs say 25/1000 , i.e. you have to take it as a proportion compared to the odds. The spread is usually around 0.2 when the odds are around 2.0, thus the ~12% spread.

Since decimal and binary odds are equivalent, they will be a precise conversion of each other and the spreads will always be exactly the same (if they weren't, you could use one particular form of odds to get an advantage).

Remember also that they will also vary the spread during times of high or low volatility.
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Old Feb 28, 2006, 7:23pm   #3
 
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Quote:
Originally Posted by jules101
You can't use the absolute difference to calculate spread for decimals odds, e.g. 1.01/1.04 vs say 25/1000 , i.e. you have to take it as a proportion compared to the odds. The spread is usually around 0.2 when the odds are around 2.0, thus the ~12% spread.

Since decimal and binary odds are equivalent, they will be a precise conversion of each other and the spreads will always be exactly the same (if they weren't, you could use one particular form of odds to get an advantage).

Remember also that they will also vary the spread during times of high or low volatility.
Jules,
I will give you an example for odds I looked up yesterday. The decimal price quoted was 1.92 to 2.1 for a major financial index and the binary price quoted was 48 to 52. If I wanted to bet 100 on the decimal price say to back the outcome I would win 92 if the outcome was successful. However in this case the spread is equivalent to 0.19 x 100=19. If I wished to buy the binary bet to make 92 (assuming a successful outcome) this would cost me 1.92 per point the spread in this case is 4*1.92=7.68. This is significantly cheaper especially if the market goes against you and you wished to apply a stop loss.
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Old Feb 28, 2006, 7:58pm   #4
 
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Originally Posted by Hunter99
Jules,
I will give you an example for odds I looked up yesterday. The decimal price quoted was 1.92 to 2.1 for a major financial index and the binary price quoted was 48 to 52. If I wanted to bet 100 on the decimal price say to back the outcome I would win 92 if the outcome was successful. However in this case the spread is equivalent to 0.19 x 100=19. If I wished to buy the binary bet to make 92 (assuming a successful outcome) this would cost me 1.92 per point the spread in this case is 4*1.92=7.68. This is significantly cheaper especially if the market goes against you and you wished to apply a stop loss.
The spread for the decimal is 0.19 you are right, but you need to divide this by the midpoint (2.0). It would be silly if they had a different spread on each form of odds. 48/52 is identical to 2.1/1.92 after rounding: 1/2.1 = 47.6 and 1/1.92 = 52.1
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Old Mar 1, 2006, 7:51pm   #5
 
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Quote:
Originally Posted by jules101
The spread for the decimal is 0.19 you are right, but you need to divide this by the midpoint (2.0). It would be silly if they had a different spread on each form of odds. 48/52 is identical to 2.1/1.92 after rounding: 1/2.1 = 47.6 and 1/1.92 = 52.1

I think the point of my thread was to highlight the differences between these two forms of pricing. Correct me if i'm wrong but In the above example the decimal lay price would have to decrease from 2.1 to 1.92 before you start making a profit (a spread risk of 19), the binary price would only have to move by 4 points in order to make a profit (a spread risk of only 7.68).
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Old Mar 1, 2006, 10:06pm   #6
 
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Quote:
Originally Posted by Hunter99
I think the point of my thread was to highlight the differences between these two forms of pricing. Correct me if i'm wrong but In the above example the decimal lay price would have to decrease from 2.1 to 1.92 before you start making a profit (a spread risk of 19), the binary price would only have to move by 4 points in order to make a profit (a spread risk of only 7.68).
You are thinking about this the wrong way, the spread risk isn't 19 (well, 2.1-1.92 * 100 = 18), it's around half of this. As soon as you place the 100 bet at 1.92, you are effectively down around 8 (it would need an immediate lay of 92 at 2.1 to create this loss). So the spread risk is approximately 8 (i.e. exactly the same as with the binary taking into account rounding). You have to remember that binary and decimal are 100% equivalent.
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