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A General Election “sure thing”?

January 12th, 2005

    Is this the way to a near-certain profit?

One of the site’s regular contributors, Jon, has come forward with an ingenious plan that could be the nearest there is to a “sure thing” on the General Election.

His idea is simple – BUY the Tories at £10 a seat, at the level 195 seats on the spread-betting markets. At the same time BACK Labour for £1000 to win most seats at the General Election at the current price of 1.18 on the Betfair betting exchange. At that price you win £180 if Labour does get most seats but lose £1000 if it doesn’t.

If the Tories fall short of the 195 target then you are still a net winner with your Labour bet until Michael Howard’s party drops to below 177 seats. For you to lose your Labour to win most seats bet then the Tories will have to win something like 280 seats and your losses will be mostly offset by your spreadbetting winnings. Once the Tories are over 295 seats you are back in a profit situation.

Tories 177 or less you lose £10 for each seat.

Tories 177-195 you end up as an overall winner from your Labour bet.

Tories 196-280 (approx) seats you win on both bets.

Tories 281-295 seats you lose upto a maximum of £150

Tories 295+ your spreadbetting profit exceeds your Labour most seats losses.

You have to factor in the commission that Betfair and Spreadfair charge on winning bets and the the lower the Tory buy price the less the risk. The current spread is 194-197 seats.

All betting is a risk but Jon’s plan to offset part of a Tory buy at these level with a Labour win bet at the current 1.18 makes a lot of sense. What you are doing is buying an 18 seat reduction in the level that your spread bet will start losing for the very marginal additional risk of the Tories getting a seat total in the 280-295 range.

Mike Smithson






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