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Hedging on a game to protect the value of tickets

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  1. smerks smerks is offline

    Mississauga
    Canada

    Posts: 136
    Joined: Mar 06

    Feb 24th, 2010 (2/24/2010 1:55pm)

    How would you go about hedging in this scenario:

    Tickets are $4000 and you expect them to drop to $2000 if the team you hope to see loses?

    Canada plays Russia today in the quarter finals and would still have to win another game in the Semi-final to advance to the Gold Medal game. We want to buy tickets now at a more reasonable price and then bet against Canada :( to try and protect ourselves from the tickets dropping.

    What would we have to bet on Russia now, and presumably Sweden in the next round vs Canada to make this less of a risk.
     
  2. sponge1430 sponge1430 is offline

    Bethesda, MD
    United States

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    Feb 24th, 2010 (2/24/2010 2:00pm) in reply to smerks

    what are the current odds for this game and to win the gold?????
  3. tommpat2000 tommpat2000 is offline Chief Asshat

    Saint Paul, MN
    United States

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    Feb 24th, 2010 (2/24/2010 2:02pm) in reply to smerks

  4. smerks smerks is offline

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    Canada

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    Feb 24th, 2010 (2/24/2010 2:05pm) in reply to sponge1430

    Russia is +125 on the first book I looked at but I can't get odds to win the tournament because the US/Swiss game is in progress. Ideally i'd like to take Russia +1.5 goals at whatever price I have to unless that is retarded.
     
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  5. m4tth3w1 m4tth3w1 is offline

    Hinckley
    United Kingdom

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    Feb 24th, 2010 (2/24/2010 2:05pm) in reply to smerks

    Can't you just treat this as an EV equation?

    What will tickets cost if Canada make the finals?
  6. smerks smerks is offline

    Mississauga
    Canada

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    Feb 24th, 2010 (2/24/2010 2:07pm) in reply to m4tth3w1

    I assume tickets will approx double if Canada were to make the finals and be approx cut in half if they lose the quarters or semis.
     
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  7. m4tth3w1 m4tth3w1 is offline

    Hinckley
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    Feb 24th, 2010 (2/24/2010 2:24pm) in reply to smerks

    Wait just realised don't know odds of reaching final////
  8. tyballs11 tyballs11 is offline

    IL
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    Feb 24th, 2010 (2/24/2010 2:31pm) in reply to m4tth3w1

    50/50 obv
  9. smerks smerks is offline

    Mississauga
    Canada

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    Feb 24th, 2010 (2/24/2010 2:33pm) in reply to tyballs11

    Odds of reaching the final would be approx 55% of winning vs Russia and then 65% vs Sweden if that helps.
     
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  10. 64spush 64spush is offline

    Waterloo
    Canada

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    Feb 24th, 2010 (2/24/2010 2:33pm) in reply to smerks

    Since you aren't planning on reselling the tickets, you wouldn't really want the gain in EV if CAN makes finals to be equal to the losses of your bets in previous rounds. We're looking to find a balance, hence hedging.

    If you're willing to take say a $500 loss if CAN is eliminated (instead of say a $2k loss as you anticipate) you can do the following:

    Bet $1150 on Russia on Bet365.com (best odds right now) at odds of 2.3

    Russia win: You win $1495 (say $1500), so you lose $500 in value off your tickets.

    Russia loss: down $1150.

    Then CAN faces SWE, you can expect to get your money in at odds of 3.0 at least on SWE, certainly better if the Swedes go down to Slovakia.

    Assuming odds of 3.0:
    Bet $1325 on SWE:
    SWE win: you win $2650, leaving you about -500 once you account for ticket value loss and the $1150 loss on RUS
    CAN win: you're out about $2500 on your two bets, but have tix to CAN in the finals that are probably worth $8k as you mentioned, for price of 6.5k.
  11. 64spush 64spush is offline

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    Feb 24th, 2010 (2/24/2010 2:36pm) in reply to 64spush

    If you're willing to take a $1k loss in value if CAN is knocked out, you can probably find a nicer balance in similar fashion.

    Let X be amt bet on Russia, Y amt on SWE

    You want -2000 + 1.3X = allowable loss (negative value)

    and -2000 - X + 2Y = allowable loss (again negative # here)

    and then your additional ticket price is X+Y if CAN makes it.

    GO CANADA!!
  12. smerks smerks is offline

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    Feb 24th, 2010 (2/24/2010 2:46pm) in reply to 64spush

    Thanks for doing all those calculations but I think I was asking an unanswerable question. We will be going if Canada wins so I don't think we can effectively hedge. We will be trying to sell the game if Canada loses before the gold medal game. I think we are best to just buy the tickets and if Canada loses we'll probably lose 500-700 per ticket unless there is another good matchup like USA-Russia.
     
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  13. lordxixor101 lordxixor101 is offline

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    Feb 24th, 2010 (2/24/2010 2:57pm) in reply to smerks

     
    Originally Posted by smerks View Post

    Thanks for doing all those calculations but I think I was asking an unanswerable question. We will be going if Canada wins so I don't think we can effectively hedge. We will be trying to sell the game if Canada loses before the gold medal game. I think we are best to just buy the tickets and if Canada loses we'll probably lose 500-700 per ticket unless there is another good matchup like USA-Russia.

    Not sure the question is unanswerable, I think you got several answers. That being said, I think you stumbled on the 2 best options

    1) Buy the tickets now for $4k, and take the $2k loss if Canada loses.
    2) Wait, see if Canada makes it, and pay the $8k if they do.

    So, now you need realistic odds of Canada making the finals. You stand to gain $4k in equity (if your buying the tickets anyway if they make it) if they go, but lose $2k if they don't). So, the odds to buy now has to be somewhere about 30% range (if Canada makes it more than 30% of the time to the finals your better off buying).
  14. LayTheChalk LayTheChalk is offline

    Brampton
    Canada

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    Feb 24th, 2010 (2/24/2010 3:21pm) in reply to lordxixor101

    Bro,

    Canada ain't losing to the Russians, nor will they lose again in this tourney.
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