BinarySoft Chris
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Looks like CapitalSpreads started doing binary betting recently, anyone had any experience with them?
CapitalSpreads binaries
- Thread starter BinarySoft Chris
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I wouldn't mind trying them,but what is capitalspreads like as a company?are they to be trusted especialy when it comes to binaries?And on their website why Customer Support for binaries is by email only?It means if i had a despute with them like i did with the others,i could be waiting a long time for it to be sorted if at all.I might trade with them but i won't be comfortable putting in a big deposit,and trading large amounts.
BinarySoft Chris
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More rejection?! Didn't think that was possible...
leunt said:
Capital speads seem ok, their pricing is a little off but what is the correct price in an un-hedgeable isntrument.....
Rejection is an interesting subject. As there is latency in any price published the trade can be made viod after we have submitted our order....How far out is the price you are trading on compared to others and then think about rejection.....It really dosen't bother me as usually one slips through the net
Hi
Normally the price isn't out when you make the trade, but likely is when it reaches the end of their manual queue for a dealer to accept or reject the trade. They just need an automatic system like IG to reject it quickly.
Normally the price isn't out when you make the trade, but likely is when it reaches the end of their manual queue for a dealer to accept or reject the trade. They just need an automatic system like IG to reject it quickly.
Robertral said:Capital speads seem ok, their pricing is a little off but what is the correct price in an un-hedgeable isntrument.....
Rejection is an interesting subject. As there is latency in any price published the trade can be made viod after we have submitted our order....How far out is the price you are trading on compared to others and then think about rejection.....It really dosen't bother me as usually one slips through the net
NotQuiteRandom
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What is the shortest term binary and or one touch that is out there right now and where is it?
NotQuiteRandom
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At what point does it come back with the error? Before you place the bet or after you win it?
I don't understand how they could know that it is a winning bet before it has expired so presumably they do this after you have placed the bet and it has been won?
I have looked at their pricing, it isn't bad... do you have a system that you use with them or is it more subjective?
I don't understand how they could know that it is a winning bet before it has expired so presumably they do this after you have placed the bet and it has been won?
I have looked at their pricing, it isn't bad... do you have a system that you use with them or is it more subjective?
BinarySoft Chris
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NotQuiteRandom said:
What henry means is that if the price has moved in your favour, LB will reject it most of the time, and if it has moved in LB's favour they will nearly always accept it. Most of the providers do this, but LB are especially bad.
NotQuiteRandom
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I guess that is because they have some pretty good pricing on there. They are using some accurate implied vols with relatively minimal mark ups for such a short term / unhedgable bet. (Note that I did this analysis about 6 weeks ago so it may not be current).
You are right, it would be more fair if they rejected your bet whether it had gone their way or yours if the market moved after placing the order.
You are right, it would be more fair if they rejected your bet whether it had gone their way or yours if the market moved after placing the order.
BinarySoft Chris
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NotQuiteRandom said:
"Relatively minimal mark ups"???
Ladbrokes offer the widest spread/overround of any of the providers I have seen so far...
NotQuiteRandom
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As I said, my research was done about 6 weeks ago.
If you are interested we could take a look at it together when the market opens.
I have a real time feed for both spot and implied vol. If we can get some screen shots then we can observe the strike prices and the bet prices. Then we can use stochastic calculus to calculate the fair value and look at the difference.
I am new to these boards so please forgive my ignorance but is it possible to post documents? If so then we can post the screen shots and calculations.
We should get a statistically significant sample of bet prices, say a dozen taken at evenly spaced intervals. That way we know we are not looking at an anomaly.
It will be interesting to see if they have increased their over-hedge (mark up) since I last checked.
We must bear in mind that an over-hedge of n% is legitimate as binary payoffs have infinite gamma and therefore can't be hedged. My (subjective) view is that a value of n in the region of 15 - 20% would be reasonable...) lets see.
I am happy to do the maths and have it audited on the forums. Once we have done this as a proof of concept for Ladbrokes we can do the same for other vendors and compare results. I am certain that the over-hedge will be greater for shorter term bets than longer and will decrease on a curve. This is fair / necessary. I am less sure as to whether most vendors will mark up more or less OTM than ATM.
Do you think it would be a valuable exercise?
All the best,
NQR
If you are interested we could take a look at it together when the market opens.
I have a real time feed for both spot and implied vol. If we can get some screen shots then we can observe the strike prices and the bet prices. Then we can use stochastic calculus to calculate the fair value and look at the difference.
I am new to these boards so please forgive my ignorance but is it possible to post documents? If so then we can post the screen shots and calculations.
We should get a statistically significant sample of bet prices, say a dozen taken at evenly spaced intervals. That way we know we are not looking at an anomaly.
It will be interesting to see if they have increased their over-hedge (mark up) since I last checked.
We must bear in mind that an over-hedge of n% is legitimate as binary payoffs have infinite gamma and therefore can't be hedged. My (subjective) view is that a value of n in the region of 15 - 20% would be reasonable...) lets see.
I am happy to do the maths and have it audited on the forums. Once we have done this as a proof of concept for Ladbrokes we can do the same for other vendors and compare results. I am certain that the over-hedge will be greater for shorter term bets than longer and will decrease on a curve. This is fair / necessary. I am less sure as to whether most vendors will mark up more or less OTM than ATM.
Do you think it would be a valuable exercise?
All the best,
NQR
BinarySoft Chris
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NotQuiteRandom said:
For the FTSE100 cash index or nearest FTSE100 quarterly future? All of the providers will be combining *both* of these in various ways (plus other factors) to form their prices.
NotQuiteRandom said:
15% is not too bad for the 5-minute bets, but LB seem to have a large overround across the board, there is no excuse for a 15-20% overround for the FTSE/DJIA daily bets (which are hedgeable to some extent).
NotQuiteRandom said:
Well there are few issues with this:
1) Some users of providers are getting different quotes than others, depending on how successful they have been.
2) The overround will vary over time, perhaps decrease as the provider becomes happier with the pricing algorithms. There are also large fluctuations in overrounds depending on the current volatility.
3) I'm not sure how useful the information will be? At the moment it's fairly clear that binarybet.com is the best provider by quite a margin in terms of spread/overround and the acceptance of bets, although even they do reject bets at volatile periods.
NotQuiteRandom
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Hi Jules101,
I have addressed your responses in order:
1) The safest to test would be the FX bets as they have by far the most liquid underlying. Apologies for not being clear.
I understand how the vendors calculate their prices, the issue at steak here is the difference between the price they offer and the statistical fair value. This is the only possible measure of the over hedge / markup / over round / spread (or whatever we wish to call it).
2) How would you hedge infinite gamma assuming you can not run a matched book? The bets are too small for static replication. I am unclear on what you mean by the phrase "to some extent" and why you have isolated the FTSE and Dow bets in this category. Please expand on this as it is the subject of extensive academic research and I would be pleased to compare your proposed method to the existing literature.
3) This section of my response is cut up into your 3 points:
i) Can we empirically verify that the company in question offers different pricing to different users? The only way to do so would be to have 2 users (one with the additionally marked up prices) log onto the site simultaneously and each take screen shots of the prices they get with the same time stamp. Alternatively they could use one of the many recording products to 'video' their screen. I am skeptical that this discriminatory pricing is in practice but if you can provide the evidence I will of course yield.
In the event that you are unable to provide evidence we must accept that the prices shown to the un-logged in observer are dealable. This being the case my proposed experiment would be entirely valid and relevant to all, rather than just new or loss making, users.
ii) Mark ups may be time varying. This is why I suggest that an important part of the proposed experiment would be to take samples of the prices at different points in time.
Your statement:
"perhaps decrease as the provider becomes happier with the pricing algorithms."
is unclear. Are you suggesting that they reduce the mark up over fair value over the long term as they have more data and are able to observe the effect of different mark ups on their book? This may be so but would not be relevant to their pricing from one day to the next. It is not a relevant factor in this discussion.
iii) I neither agree nor disagree that provider A is "better" than provider B as I have not done the comparative analysis and nor have you. It would be improper to suggest that it was the case without doing the experiment that I defined above.
Betting and trading are all about maths, especially when it comes to quantifying who offers better odds. You can not therefore say that:
"it's fairly clear that binarybet.com is the best provider by quite a margin in terms of spread/overround"
if you have not done the very tests which would determine this you can not use a throw away word like "quite".
Please adopt a scientific approach or desist with the subjective conjecture. I do not mean to sound harsh but the great thing about this subject is that there is a right and a wrong answer and maths can prove it.
Would you like to conduct a genuine test to determine who offers the best odds on comparable binary bets or would you rather accept that no tests have been run and we can not therefore know who has the better pricing?
I have addressed your responses in order:
1) The safest to test would be the FX bets as they have by far the most liquid underlying. Apologies for not being clear.
I understand how the vendors calculate their prices, the issue at steak here is the difference between the price they offer and the statistical fair value. This is the only possible measure of the over hedge / markup / over round / spread (or whatever we wish to call it).
2) How would you hedge infinite gamma assuming you can not run a matched book? The bets are too small for static replication. I am unclear on what you mean by the phrase "to some extent" and why you have isolated the FTSE and Dow bets in this category. Please expand on this as it is the subject of extensive academic research and I would be pleased to compare your proposed method to the existing literature.
3) This section of my response is cut up into your 3 points:
i) Can we empirically verify that the company in question offers different pricing to different users? The only way to do so would be to have 2 users (one with the additionally marked up prices) log onto the site simultaneously and each take screen shots of the prices they get with the same time stamp. Alternatively they could use one of the many recording products to 'video' their screen. I am skeptical that this discriminatory pricing is in practice but if you can provide the evidence I will of course yield.
In the event that you are unable to provide evidence we must accept that the prices shown to the un-logged in observer are dealable. This being the case my proposed experiment would be entirely valid and relevant to all, rather than just new or loss making, users.
ii) Mark ups may be time varying. This is why I suggest that an important part of the proposed experiment would be to take samples of the prices at different points in time.
Your statement:
"perhaps decrease as the provider becomes happier with the pricing algorithms."
is unclear. Are you suggesting that they reduce the mark up over fair value over the long term as they have more data and are able to observe the effect of different mark ups on their book? This may be so but would not be relevant to their pricing from one day to the next. It is not a relevant factor in this discussion.
iii) I neither agree nor disagree that provider A is "better" than provider B as I have not done the comparative analysis and nor have you. It would be improper to suggest that it was the case without doing the experiment that I defined above.
Betting and trading are all about maths, especially when it comes to quantifying who offers better odds. You can not therefore say that:
"it's fairly clear that binarybet.com is the best provider by quite a margin in terms of spread/overround"
if you have not done the very tests which would determine this you can not use a throw away word like "quite".
Please adopt a scientific approach or desist with the subjective conjecture. I do not mean to sound harsh but the great thing about this subject is that there is a right and a wrong answer and maths can prove it.
Would you like to conduct a genuine test to determine who offers the best odds on comparable binary bets or would you rather accept that no tests have been run and we can not therefore know who has the better pricing?
BinarySoft Chris
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1) I primarily bet on indices and individual shares, I have very little experience in FX betting so you would be alone on that one.
2) Depending on the time until expiry and other factors, it's possible to simply go long or short on the underlying future to hedge some of the risk. I know it isn't an exact hedge, but the bets are far from "unhedgeable" (even for 5 minute bets). I'm developing a market making service which will run on the Betfair exchange which will hedge using the underyling futures in certain situations.
3)
i) There are other threads regarding different quotes possibly being supplied to different users from finspreads.com, although noone has yet cooperated to get screenshots at the exact same time. If this does exist, then it's likely it will only exist for providers who do not make their live binary prices public (binarybet are the only such provider I think who make their *live* odds accessible publicly on their homepage). Finspreads do provide quotes on their home page but these are delayed.
At the end of the day, binary bets are not currently FSA regulated so the providers are perfectly within their rights to provide different quotes to different users.
ii) "perhaps decrease as the provider becomes happier with the pricing algorithms." - I was merely speculating. The overrounds vary substantially during the day for all the providers I have tried so far, although I do remember when I first created an account with CityIndex earlier this year the spreads were definitely wider than the current average.
iii) Yes it was a subjective judgement, but ask most serious players and most of them will choose binarybet mainly because of the fast fills (if the volatility is not too high), that's assuming they are still on "automatic" mode with BB. Getting an order filled as fast as possible is normally the top priority, not getting the best price of the bet that is available.
Regarding statistics of these bets - the exact volatility in the underlying instrument is impossible to calculate, it can merely be estimated.
I'm not saying doing these tests would not be useful in general, I just think that the providers are constantly updating their pricing algorithms so knowing who is "best" at a particular time may not be that handy, especially as all of the providers will be shifting their spreads about trying to balance the book.
2) Depending on the time until expiry and other factors, it's possible to simply go long or short on the underlying future to hedge some of the risk. I know it isn't an exact hedge, but the bets are far from "unhedgeable" (even for 5 minute bets). I'm developing a market making service which will run on the Betfair exchange which will hedge using the underyling futures in certain situations.
3)
i) There are other threads regarding different quotes possibly being supplied to different users from finspreads.com, although noone has yet cooperated to get screenshots at the exact same time. If this does exist, then it's likely it will only exist for providers who do not make their live binary prices public (binarybet are the only such provider I think who make their *live* odds accessible publicly on their homepage). Finspreads do provide quotes on their home page but these are delayed.
At the end of the day, binary bets are not currently FSA regulated so the providers are perfectly within their rights to provide different quotes to different users.
ii) "perhaps decrease as the provider becomes happier with the pricing algorithms." - I was merely speculating. The overrounds vary substantially during the day for all the providers I have tried so far, although I do remember when I first created an account with CityIndex earlier this year the spreads were definitely wider than the current average.
iii) Yes it was a subjective judgement, but ask most serious players and most of them will choose binarybet mainly because of the fast fills (if the volatility is not too high), that's assuming they are still on "automatic" mode with BB. Getting an order filled as fast as possible is normally the top priority, not getting the best price of the bet that is available.
Regarding statistics of these bets - the exact volatility in the underlying instrument is impossible to calculate, it can merely be estimated.
I'm not saying doing these tests would not be useful in general, I just think that the providers are constantly updating their pricing algorithms so knowing who is "best" at a particular time may not be that handy, especially as all of the providers will be shifting their spreads about trying to balance the book.
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