Inside the Trading Room
The latest and greatest news, articles and thoughts from the Sporttrade team.
September 28th, 2021
Read This and You’ll Be Begging to Trade In and Out of Your Sports Bets
By Dan Koob
Staring at my television screen watching myself go .500 during the first week of NFL games, I couldn’t help but think to myself: I really wish I didn’t have that fourth slice of pizza.
I also, for the Love of Tebow, definitely shouldn’t have bet that the Jaguars would beat the Texans. Goodness.
But you know what else I noticed? We all have weird hang ups. Like, really weird.
For example: I think in order to truly judge a person’s character, you have to find out if they like Friends or Seinfeld. You cannot love both. It’s impossible. Two entirely different forms of writing and comedy. You either like Joey being stupid, or you appreciate how every Seinfeld episode weaves 3-4 storylines together within 20 minutes. Take a guess which side I’m on.
The sports betting community also has weird hang ups. Specifically, our attachment to wins and loses.
Everyone wants to win, but is taking a cash out when you’re down or unconvinced your sports bet will cross the finish line an admission of failure? Of weakness? You won’t always have the opportunity to leave your sports bet early, but some may think sticking with your sports bet as it sinks into the sports betting abyss or rises up into your account balance is a noble endeavor.
I’d argue it’s archaic. But what's the alternative? Why, as sports bettors, are we locked into a convention that’s basically a one-way street?
Why not “trade sports” like we trade stocks? Is that so unimaginable?
Well, maybe not. Let's talk about a common stock trading strategy - directional trading.
Directional trading, like in financial markets, should be the future of sports betting. It’s why we are building a sports betting exchange.
But what is directional trading?
A directional trade is a trade where you’re betting on the price movement of a security in a shorter time frame. You don’t really care where it ends up (think $GME or $AMC), you just care where you believe it's trending. You want to sell out after a price movement.
Week 1 of the NFL 2021-2022 season matchup between the Kansas City Chiefs and Cleveland Browns provided the perfect canvas for a directional trader and future Sporttrade user. You’re convinced the Browns aren’t afraid of the Chiefs after last year’s AFC Divisional round that saw the Browns one drive away from a major upset. That doesn’t mean you’re sold on Cleveland actually winning the game, but they can go into Arrowhead and compete.
At $32 per contract on Sporttrade for Browns To Win, you spot an opportunity to make some money by trading directionally on our exchange.
Let’s take a detailed, step by step look at how this could work. You deposit $100 in your account and go ahead and purchase one contract of Browns to Win at $32.
By the 11:33 mark of the 2nd quarter, the Browns are winning the game 15-3 after a Jarvis Landry touchdown run. Even though there are over 40 minutes left in the football game, your trade’s value has appreciated to $70 per contract.
What do you do? If I’m in that position, I’m selling the Browns immediately. You’ve nearly doubled your initial investment with 2.5 quarters of trading left.
Buy low. Sell high.
Once you’ve sold, your account balance is now $138.
Where you go from here is up to you. Conventional wisdom might say at this point to “Buy The Dip” on the Chiefs To Win, who are now trading at around $30 to win the game. I’m suggesting we keep trading directionally assuming a Chiefs comeback. We’re going long on Kansas City.
Let’s say we buy 2 contracts at $30 each, totaling $60.
Educational point: Why are we buying more than one contract?
Buying more than one contract is like buying more than one share of a stock. It provides flexibility. If the Chiefs make the game more competitive and drive up the probability/price of your trade winning, you can sell your entire lot or you can sell portions of your total contracts to secure a little profit.
At the 6:30 mark of the second quarter, Patrick Mahomes runs in a Kansas City score from 5 yards out to make the game 15-10 Cleveland. Even though the Browns still held a lead, the market price crept up for the Chiefs. The value of a Chiefs To Win went up to $47.
A contract of Chiefs To Win at $30 moving to $47 is a difference of $17 per contract. Multiply that by 2 contracts and you’re up another $34.
Let’s secure some profit by selling 1 of our 2 contracts.
If you remember, we had $138 in our account after our first successful trade. We then bought 2 contracts for the Chiefs to win a total of $60.
So prior to our second sell, our available funds are $78 ($138 minus $60). After we sell 1 contract at $47, we now have $125 dollars of available funds ($78 remaining in our account plus the $47 we have made by selling our latest trade).
We also still have 1 contract of the Chiefs To Win sitting out in the market, currently worth $47.
Again - Buy low. Sell high.
Let’s take a breath, stretch our legs and watch some of the game...
Four slices of pizza later, we’re now in the fourth quarter. Cleveland has scored with 10 minutes to go and is up 9. At this point, you’re happy with your haul after two trades, but a massive directional trading opportunity has presented itself. You go back into the Sporttrade app and see Browns to Win is now trading at $75, meaning the Chiefs To Win is staring you right in the face at a ridiculous price of $25.
You can’t believe it.
Not only do you think Patrick Mahomes is the best player in the NFL, but you also know he’s led four 4th quarter comeback wins since KC’s Super Bowl win in Feb. of 2020, an amazing number for a team that’s rarely in the position to have to scramble.
You have $125 in your available funds. Your 1 remaining contract of Chiefs To Win is down to $25 from its original price of $30, but you’re confident the Chiefs are going to win or have the ability to score immediately.
So, you buy 3 contracts of the Chiefs To Win at $25 per contract, $75 in total.
14 seconds later, Mahomes hits Tyreek Hill for a 75 yard touchdown and your trades are off to the races.
Kansas City wins the game. Those 3 contracts you bought at $25 are now worth $100 each.
You just made $225 off those trades.
Your other outstanding contract of the Chiefs To Win (originally at $30) also settles at $100. So, you can tack on another $70.
Now you’re up to $295. Add on the remaining available funds you didn’t use, and your total account is worth $345 from your original $100.
I don’t care if you love Seinfeld, Friends or I Love Lucy, if you’re in the room with me when that sports bet settles, we’re hugging it out.
Obviously, this is an example of directional trading going 100% right. It’s perfectly possible (and probable) one or more of your sports trades doesn’t work out. That’s ok on Sporttrade! You have the ability to trade in and out of your positions at any time, stopping losses in their tracks and ultimately saving you from losing too much money.
Directionally trading on Sporttrade is about to change the way we all bet on sports.