What are Moving Odds Bets?

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In the realm of Financial Markets Betting, there are many options available, such as Spread Betting and Fixed Odds Betting. The latter encompasses bets in which odds may be static or moving, just as market levels may be static or moving. The form of wagering in which odds are static and markets are moving is called Static Odds Betting, while the term Moving Odds Bets is used to describe wagers made when market levels are static but the odds are constantly changing.

At both Ladbrokes and PartyBets, for example, Moving Odds Bets may be placed on a number of financial markets, including stocks (UK 100 index and US 30 index), foreign currency exchange rates (Forex) and commodity markets (Gold, Silver, Crude Oil, etc.). The method of betting is roughly the same for each.

With any selected market, the bettor wins when he or she correctly predicts that the market’s settlement level is above or below the market level at the time the bet is placed. When the market’s settlement level is exactly the same as the level at the time the wager was made, the bet is treated as a Dead-Heat. Half the stake is treated as a losing stake and the other half is paid out at the odds that were chosen at bet placement.

Moving Odds Bets can be applied to three different (static) market levels. During a chosen betting period, three lines are quoted. The first of these, the “mid line,” represents the starting price level. It will always be the same amount throughout the trading period, whether the interval is five minutes, one hour or a full trading day. A Moving Odds Bet can be placed on whether the closing price at the end of the interval will be above or below this line at fixed odds corresponding to the current offer.

Take, for example, a “daily” wager on the UK 100. The betting period will expire at 4:30pm on the same business day the wager is made. At the time the market opens at 8:10am, starting level might be 4636.1. The associated odds might be 10/11 either way. In other words, a correct bet of £22 on the market ending higher than 4636.1 will win 10/11 or £20, just as a successful wager on the market closing lower that 4636.1 would also pay £20 on a £22 bet. An unsuccessful bet would lose the full £22.

At noon, the current market price might stand at 4640.3. It has gone up 4.2 points. Nevertheless, it is still possible to make a Moving Odds Bet that the closing level will be higher or lower than the starting level 4636.1. The difference is that the odds offered will have changed. Because the price has already moved up, a successful bet on the market ending higher than 4636.1 will only pay 4/7, while a wager on the closing level to be lower than 4636.1 will now draw odds of 7/2. The line is static; the odds move.

Another common Moving Odds Bets on market levels is based on the “low line” appearing below the mid line. It is possible to wager up or down relative to this line. For the low line starting at 4627.7, a Moving Odds Bet can be made at 8:10am that the closing price will not fall as low as this line at odds of 1/5 or that it will fall lower than this line at odds of 7/2. By noon, those odds will have changed to 1/6 and 8/1, respectively.

Similarly, a Moving Odds Bet may be based on the “high line” appearing above the mid line. For the high line starting at 4642.2, a successful bet made at 8:10am that the ending price will not reach that high would pay 2/11, while a correct bet that it will exceed that level would pay 4/1. By noon, those odds will have changed to 1/6 and 2/1, respectively.

Note that the distance of the high line and low line compared to the mid line never changes throughout the trading day, but the odds offered will be moving constantly. How greatly the odds shift depends on two factors: first, how much the current market price differs from its starting level and, second, the time left to expiry of that particular market. Typically, the closer to the closing time, the less volatile the odds will be.

Bettors will want to watch the odds move throughout the duration of the betting interval. As they fluctuate, potential payouts may be more or less favourable and “hedge bets” can be made if the original wager seems at risk.

Published on: 14/09/2012

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