Key Concepts

Real odds in options, Options Volatility | Implied Volatility in Options - The Options Playbook

Help Centre Community Responsible Gambling Contact Real odds in options How to calculate betting margins Learning how to calculate betting margins is a vital tool in any bettor's armoury.

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Once you have mastered this simple calculation, you can easily identify who offers the best odds. Betting margins are the difference between the odds an implied probability the customer is offered to bet at, and the true probability of the outcome.

What are bookmakers' margins? Bookmakers make money by accepting bets on a market and pricing it in a way that does not represent the true probability of the outcomes.

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This margin, or overround, gives them an edge over bettors. When pricing an event, bookmakers aim to set odds that will attract betting on both sides of the market, therefore balancing their liability on all possible outcomes. Therefore they build a margin into their markets, resulting in a profit if their liability is balanced.

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A fair market The simplest way to explain bookmaker margins is with a coin toss. For the coin toss, bookmakers would offer heads or tails at odds below 2.

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If the odds were offered at 1. To work this out you must first incorporate the commission into the odds.

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In comparison, one UK high street bookmaker offered a margin of 7. Remember, unlike some other exchanges, commission is only paid on Smarkets if you win.

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