Three day game

Andy Murray finally put to bed his forth round match at the US open. But the fact it took three days highlights one of the potential issues with trading Tennis. Do you take a long term or short term position, do you hold a position or close it out at defined points?

There are two sides to the coin. The fact an event has no definitive end point vastly increases the volatility and the chance of getting two prices matched at different levels. This increases your chance of success. In a limited time event you not only have the underlying score to think about but also the time value of money. In Tennis this effect is less pronounced.

On the flip side how long the match takes to finish is an important consideration. If you are taking a longer term position you could have to wait some time for a payoff and if the match is interrupted or plays out over a long time frame that could affect the viability of the trade. I tend to look at opportunities from a few perspectives. How often can I find an opportunity and how long will it take to mature?

If you look at a football match, you could find an opportunity in there where your exposure can only last a maximum of 90 minutes or so. If you look at a horse race you could do nine races in those 90 minutes. So you have to ask yourself, what can I yield on a football match and could I yield nine times less but more frequently on the horses?

This is how I approach each day in terms of looking for opportunities. The best scenario is to have multiple sports starting at multiple times. as this means I can participate on all. But if I am forced to choose, it has to come down to the yield multiplied by opportunity equation. It’s at that point that you realise that this itself is also a factor of time.

Category: Football trading strategies, Tennis