As illustrated in previous portfolios, my betting plans are not necessarily based on taking a definitive prediction about the result or, in some cases, even taking much of a risk.
Rather, the game is to set up a position that is predicted to improve on betting markets over time. Even better, hedge multiple markets against one another, therefore taking a ‘wrong’ price. So long as the position is strong at the final count, profit can be secured then by covering the overall portfolio.
Brexit offered the perfect example. My strong view throughout was that it would be very close, therefore making a narrow Remain win excellent trading value. Even if Remain had surrendered favouritism, the odds about a narrow Remain win would have fallen.
The best trade in that portfolio was a loser – when I hedged between two markets to take 11.0 about Remain getting anywhere between 50 and 52.5%. As soon as the early results were declared, it became clear that securing a profit would be easy – backing the side of the line that was in play, either over 52.5 or under 50 (Leave).
I have similar plans for the US election, about which there is a definitive, confident prediction. For at least the seven reasons laid out last month and the past year, Hillary Clinton will win. I have a substantial risk open on a Trump win, which could be closed for profit. I’m not interested.
Without going through all the reasons again, the most striking regards the electoral college. Even if Trump does turn his poor campaign around, even if Clinton is damaged by e-mail revelations, he would still face an almighty task to get 270 electoral college votes.
The latest Realclearpolitics map projects Clinton on 272 – over the line, even before 112 votes in the 9 toss-up states are decided. I challenge any Trump backer to explain how he wins every toss-up, then takes one from the ‘leans Clinton’ box.
But let’s play along. Any route involves Florida, Ohio and North Carolina – which aren’t in the Clinton column yet but where she consistently leads. In each case, Trump is at least 3.0 (33%) on Betfair.
So if you were going to back Trump for the presidency at [4.7], it would make more sense to instead spread the stake three ways at 3.0 in each state. That way, you only need one of them to cover the outlay and he could quite plausibly win all three, yet lose the presidency.
As we get closer, there will be countless combo/hedge opportunities – between Betfair’s electoral college votes market and either state betting or handicap lines. Betfair have a Trump +24.5 line already but liquidity is weak. In time, that will improve and new lines will open up, hopefully with a variety betting firms.
With those later options in mind, Trump is still a great value lay at 4.8. If the electoral college market is a guide, Clinton is about 1.75 (57%) to get 330 electoral college votes. So in theory we could lay the two high bands there as a cover, creating a ‘middle’ of 270 – 329 where both bets win. At current odds, this hedge plan equates to a bet around 4.6 (22%).
In my view that 1.75 will shorten over the next few weeks, so for now I’m just having one side of the bet – laying Trump at 4.8. Eventually I will cover but let’s wait and see what other options become available. It may be that the best cover is just to back a few key states as explained above. If I’m wrong, I can always get out with a loss. It would take a dramatic, sustained swing for Trump to assume favouritism.
Finally lest we forget, as we’re laying Trump rather than backing Clinton or her margin of victory, we would win were Trump to withdraw early. Highly unlikely, but an outcome that I’ve been determined to keep on side from the start!
Lay (oppose) Donald Trump 50 units @ 4.8 to be Next President
Updated next president position
Hillary Clinton +112 units
Donald Trump -366 units
3 responses to “Traders can still win big from opposing Trump”
What would you suggest to someone who has not placed any bet on US elections until now?Maybe lay more units on Trump than 50 on current odds?
Hi Ionannis. I would stick with 50 for now, then follow my cover bets later on. I will be focusing mostly on the electoral college distribution and handicaps. If he shortens below 4, then yes lay some more.
In my opinion, you’re missing the most crucial points: pollsters have lots of experience, and do a good job, estimating likely voter turnout for the usual run of the mill elections between professor politicians, but ZERO experience predicting turnout in once in a lifetime votes like brexit – where many people who hadn’t voted for 20 years voted – and a populist like trump.
Furthermore, outing oneself as a trump voter is not socially acceptable in some circles; trump apparently beat polling in the primaries by an average of 5%. This is far more than the what he would need to crush Hillary.