Binary Trading. John Piper

favour Arsenal but think it is over-priced. So you bet on West Ham to win (you pay 34). You go for £10 per point and your risk is £340 (34 x £10) and your potential profit is £660 (66 x £10).

      The match starts and West Ham get off to a roaring start scoring the first goal after 10 minutes and Arsenal have a key man sent off. The binary price jumps to 65/68. This means that you could sell the bet at 65 – you are well up!

      You decide you are going to sell, you sell at 65 and bag 31 points (the 65 sale price less you purchase price at 34) at £10 per point = Profit £310.

      The match continues and Arsenal come back into the game and score two goals. Suddenly the West Ham to win price drops to 5/8.

      It’s too good to miss, you buy at 8…

      The following chart shows these movements.

      Figure 3.3: binary price chart during a football match

      The strategy here is: bet on a lowly priced team and then get out when they score the first goal.

      I was watching just such a game and a goal was scored. The binary price jumped from 20-24 to 88-92. This is extraordinary behaviour – and not something that one finds normally in financial markets.

      Summary

      In this chapter we have taken an in-depth look at five of the more interesting binary bets and examined a number of ways in which they can be used. The five bets are:

      1 Up/Down (reversals)

      2 Tunnels/Barrier Bets

      3 OneTouches

      4 Hi/Los

      5 Football Match – play for the goal

      Endnote

      1 These two bets do not add up to 100 because there is a third bet Arsenal and West Ham to draw priced a 10/15. [return to text]

Part II – Strategies