How to win money by hedging between Betfair’s Trump specials

Betfair markets related to Donald Trump’s future are kicking off again as FBI investigations into the US President and his closest allies intensifies. At odds of 1.63, the chance of him serving a full first-term in office has slipped to 61% from around 68%. At yesterday’s low point, it was just 58%.

As ever with the Trump rollercoaster ride, this is an unprecedented scenario for political bettors. Never before has pricing up the chance of a president being removed from office been a priority. There is no formbook or scoreboard. Our judgement is reliant upon our own interpretation of a developing news story, stemming from mainstream media which is far from trusted by all. In these polarised times, that means we will draw very different conclusions.

Personally I’m a long-term sceptic of Trump’s ability to survive and predicted these odds would start moving in last month’s chaos update. Arrest or impeachment has seemed realistic from the outset and the likelihood is getting stronger.

However we Trump layers were famously humiliated in 2016 and there are plenty of bettors who think the Russia investigation is a rabbit hole. Thanks to this rare opportunity to hedge between political markets that are contingent upon one another, we can both win.

In effect, Trump’s political future is a series of stand-alone events – an accumulator. In order to win a second term, he needs to survive a full-term, choose to run again and then win the Republican Nomination, then finally the general election. Any combination of none, some or all of those events is plausible.

By trading and hedging between these markets over the next year, we should be able to set up profitable positions ahead of 2020, for which markets will really liven up next summer, following declarations and with the first primary debates. Here’s how some potential scenarios could pan out and thoughts on the best way to play them.

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***Some notes on staking***

Of course a fundamental problem with employing such strategies in size is tying up considerable sums for up to 2.5 years. Another is that we can only make a rough prediction regarding future odds in these markets. In some cases, we may need to cash out of positions early before reinvesting – for example Trump survival, once the primaries start but before he’s completed a full term.

I’m therefore loathe to recommend a precise, rigid staking plan. My strategy is basically to lay as much of these Trump 2020 odds for as much as my bank will afford, building the position as we get closer to the primaries. Another advantage of laying 2020 is that, once funds are tied up by the initial bet, we can lay others to the same risk. These markets always include no-hopers and so far, I’ve added Michelle Obama, Hillary Clinton, Mark Zuckerberg and Dwayne Johnson – at combined odds around 7.0. Along with the Trump lays, the combined odds of my lay position is around 2.2.

Below, however, is a rough guide for readers to follow,  to be updated in the months and years ahead. To be clear – I’m not having the Trump cover part of the bet yet, because I think the end may well be nigh. But if you want to hedge from the outset, here’s the plan.

Lay (oppose) Donald Trump to be Next President 100u @ 3.2

Lay Donald Trump to be Republican Nominee 100u @ 1.64

Lay Donald Trump to leave office in 2018 10u @ 10.0

Next step: On 1/1/2019, Lay Trump to leave office in 2019. Stakes to be advised at the time.

To summarise, if Trump either leaves office early or decides not to run for a second term, the first two lays will yield 200 units profit. Our maximum loss on the other side of the trade at this stage is 90 units, if he goes this year. So an imminent departure would settle all those positions and yield 110 units profit (minus whatever small cashout loss if so desired).

If he’s still there at the end of 2018, we’ll make ten units on the first leg of our Trump saver accumulator. The plan then will be to lay 2019 to lose 100 units – the initial 90 risk plus the ten units profit.

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