Wednesday, June 22, 2011

Rain Interruptions and the Tennis Trading Opportunities they bring

Already at Wimbledon this year, we have seen a few matches that have had to be stopped due to rain or poor light and with the forecast for the next few days, there promises to be a few more. 

So what do these match suspensions mean for traders? Well, its back to that old term - momentum - whichever player has the momentum loses it and the player that is struggling gets an opportunity to regroup, analyse why they are losing and come up with a plan to put it right.

Often when a match restarts, it is a completely different match to the one that was taking place before the stoppage. So the things to look out for when stoppages occur are:

1. What are the prices of the players compared to what they were before the match started? Does this price represent value? 

Example: Djokovic played Del Potro at the French Open and they came off court with the score at 1 set all, Djokovic’s price was 1.15 at the start of the match but 1.25 when the match restarted. This represents value on Djokovic as he is still just as likely to win as he was at the start of the match.

2. Who will go into the break feeling better? This is key because we all know that any situation can be viewed completely differently by different people. If a player was 2 - 0 up and was pegged back to 2 sets all and then they need to go off overnight or for a prolonged rain break, which player is going to be feeling better about the situation?

Example: Andy Murray was 2 sets down against Troicki in the French Open before fighting back to 2 sets all and then they had to leave court and the match restarted the next day. Murray left the court punching the air, whereas Troicki left looking dejected - he probably felt like he had just lost the match. However, the score is 2 - 2 and he still has a great chance of winning, if he had just fought back from 2 - 0 down he would be feeling jubilant but the situation is actually the same - its 2 - 2 and they still had to play a deciding set.

3. If the underdog is leading then a stoppage is the last thing he/she wants as they will lose all their momentum. When it restarts, it will be like a new match so look at the head to head record of the players and if the favourite has a good record against the dog and there is still a long way to go then back the favourite (or Lay the Dog) as this represents a value trade.

4. If the favourite is in the lead and you have been backing him and you are in a situation where you can green up for profit - do so. The match could be completely different when it restarts and apart from anything else, you don’t want your stake tied up when it could be working for you in other matches.

5. Because of point 3 above, the dog’s price will probably drift during the break - this is an opportunity to gain a few ticks before the match restarts.

Finally, lets hope we don’t have to think about these situations too much over the next 2 weeks at Wimbledon, however I have a feeling we will!

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