I am trying to solve a simple real life scenario to calculate how much hedge is needed against a particular bet
Below is how I caluclate the liability on a single position or selection:
back(backodds-1)+rev(-N) - sum(backs) + (lay(-n)(layodds-1)) = x
If this selection wins I receive the back i.e. the amount backed times odds-1 and I pay out all the lay bets "lay" i.e bets that it will lose
I need to monitor the net result of this and make adjustments to manage my maximum liability x
Then I need to either reduce the lay bet "Lay" or place a back bet "back" N until x is at the required level.
doing this reduces my revenue "REV" by N
I arrived at:
x =layodds*n +n
n= ?
I need a simple way to calculate n
its 35 years since I did anything like this and I need help
Below is how I caluclate the liability on a single position or selection:
back(backodds-1)+rev(-N) - sum(backs) + (lay(-n)(layodds-1)) = x
If this selection wins I receive the back i.e. the amount backed times odds-1 and I pay out all the lay bets "lay" i.e bets that it will lose
I need to monitor the net result of this and make adjustments to manage my maximum liability x
Then I need to either reduce the lay bet "Lay" or place a back bet "back" N until x is at the required level.
doing this reduces my revenue "REV" by N
I arrived at:
x =layodds*n +n
n= ?
I need a simple way to calculate n
its 35 years since I did anything like this and I need help