Market Overview

When Tiger Plays, Trading Pays

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By Brendan Poots, of Priomha Capital

Leave emotion at the door and profit from sport

The PGA Tour made its way to California this week for what would normally be the run of the mill Frys.com Open. It is not the case this year. Headlining the event is Tiger Woods, making his return from an injury enforced lay off that has had him sidelined for the last two months.

The marketing and promotional power of Tiger Woods is extraordinary. When he plays the sponsors jump on board, the prize money increases, the TV rights increase in value, and the galleries flock to see him… this despite him being ranked outside the Top 50 in the World Golf Rankings. He is a money making machine for all involved.

One aspect of his money-generating capabilities that would be lost on most is the effect he has on the global sports betting markets. When he plays, the liquidity in such markets increases 5-fold and more often than not, most of this money is centered on a Tiger Woods victory. It seems that, love him or loathe him, he is always installed as favorite to win whatever tournament he contends.

And so is the case this week. The global sports books have installed him as a $6 (1) favorite to win the tournament. In terms of probability, this equates to the chances of Tiger Woods winning being about 16%.

For Priomha Capital this is an unbelievable opportunity to trade on the event. As we stated a few weeks ago, if you can leave emotion at the door when trading on sport there is a lot of money to be made.

In assessing whether 16% represents a reasonable estimate as to the probability of Tiger Woods winning, Priomha Capital has considered the following salient facts:

  • Over the course of his career he manages to win about 20% of the time. This in itself is a remarkable strike rate.
  • He has recently changed his caddy (twice).
  • He is still in the process of changing his swing.
  • He has changed his womanising habits (we think).
  • He is recovering from recent Achilles and leg operations.
  • He has not played a competitive round of golf for seven weeks.
  • He has not won a tournament for almost two years.
  • He has lost his aura, and with it his mental dominance over his competitors. When added to these points the fact that this week's tournament is potentially the last chance for a lot of players to secure their PGA tour cards for next year, one feels that a return to the top of the leaderboard would be an unbelievable effort by Tiger Woods. To win he will need to shoot four rounds in the 60s – he would have to be at his best to do that.

When combined, Priomha Capital assesses the “real” probability of Tiger Woods winning to be closer to 5% - or in terms of odds, he should be paying $20 or more.

The following was communicated to Priomha Capital investors and subscribers prior to the event.

Suggested Investment: LAY (in financial parlance – short sell) Tiger Woods for everything you have got at anything below $8. BACK (take a long position) Tiger Woods once he drifts out to his correct price, or let it all ride if you feel ok about the above analysis.

We have outlined below how we traded on Tiger Woods – based on no emotion, some in depth analysis and with a good deal of common sense.

Priomha Trades Trade 1: LAY TIGER WOODS @ $6 for $100,000 Potential profit of $20,000 if Tiger loses. Potential loss of $100,000 if Tiger wins.

UPDATE: At the halfway mark of the tournament Tiger is languishing in a tie for 40th, seven shots off the lead. His current price is $21.

Trade 2: BACK TIGER WOODS @ $21 for $5,000 Potential profit of $100,000 if Tiger wins. Potential loss of $5,000 if Tiger loses.

CURRENT POSITION Tiger WINS Tournament – break even Tiger DOES NOT WIN Tournament - $15,000 profit

We are halfway through the tournament and we have covered our initial investment. We stand to make a potential profit of $15,000 should Tiger NOT WIN the tournament, as appears most likely.

Should Tiger turn back the clock and make one of his famous weekend charges up the leaderboard we will be able to use the global betting exchanges to continue to back him and subsequently hedge our position further, thus ensuring a profit, regardless of the outcome.

It will be a nice weekend for Priomha Capital and its investors.

As Warren Buffet proclaimed, “Invest in what you know”… Priomha knows sport.</ul>

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Golf Priomha Capital sports betting Tiger Woods topicsTopics General

 

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