Acca Insurance: No Lay 'Value'?

It can’t. If you don’t lay you save on commission creating extra value.

hi sorry just a quick quick noob question, whats EV ?
cheers

If bookie odds were true odds and you were not laying, without the free bet you would break-even on your accas over the long-term i.e. there is no profit in this situation. Of course, bookie odds are not true odds, so you actually make a loss.

When the free bet is introduced, the situation becomes profitable not because you win more when you win, but because you lose less when you lose. Over the long run this means the situation now has a positive expectation.

It is true the EV is maximised when the probability of only one leg losing is maximised, but this applies as much to the no lay method as it does to the lay method.

It is actually possible for the sequential lay method to have a higher EV than the no lay method for the same selections/prices, but only if you have an arb on the overall acca back and lay prices, which is never very likely.

Sorry have seen the feedback re the link and hopefully this will work?

https://drive.google.com/file/d/0B6gt5D_cEs4IWTJSWHNFYTRmWDA/view?usp=sharing

You can tell my technical skills are lacking somewhat

Even with an Arb ( no matter how big ) I don’t see how laying can improve EV over not laying.

No worries Mick, it can be a difficult subject to get your head around.

Grizzly, imagine a situation where the back and lay price of each leg in an acca are the same and there is no commission to pay. In this instance, the EV for sequentially laying and not laying would be exactly the same.

If you can see this, then imagine the lay price for one of the legs being reduced, creating such an arb. The no lay outcome EV is unaffected, but it has to create some additional value for the sequential lay outcome, so the EV for this must increase.

If you don’t see it, you could stick some numbers into one of the many calculators kicking about and try it for yourself!

Of course, this is largely theoretical. In practice, you won’t find an arb on acca back and lay prices (at least initially – there is the possibility prices will move in-running to create one), and you will have to pay commission. The closer the overall prices the less the difference in EV between laying and not laying, but in reality the overall back price is always going to be less than the overall lay price, which in turn means the EV from not laying is always going to be higher than the EV from laying.

But, as others have rightly pointed out, this doesn’t mean you should always not lay, as you will now have variance to put up with, and you need to appreciate the effect this can have.

If you do decide not to lay, you may still want to consider your approach. Having four short and one long leg may maximise the probability of only one leg losing and so maximise the EV, but it will also increase the variance. You might prefer to give up a bit of EV and go for five short legs instead.

The no lay option, by definition, isn’t affected by the lay price 🙂

Blue if we are calculating our overall EV by reference to the exchanges then the EV is affected even in the non lay option.

If we are not calculating EV in by reference to the exchange then what method are we using?