R P S B
Relative Performance
Stock Betting

The essence of Relative Performance Stock Betting is choosing which of 2 stocks in a specific period will do better than the other, including the effect of ex-dividend declarations in a specific period. As the bet is for a set amount, the magnitude of the differential is not in question, just which is better.

Therefore, declining less is losing less, and that will be the calculation determining the winner and loser. Of course, a stock market index can be one of the bet components, in which case the bet would be the stock against the index. Declining less is as good as increasing more in determining which bettor is the winner. Therefore, the level of the market at the end of the bettering period, is only a factor if that stock market index was one of the two betting unit components.

The Relative Performance Stock Betting ability is uniquely simple and all that is needed are two investors having different opinions as to which of the two stocks will do better in the period.

The organization arranging for there to be a counterparty for all bet initiators may find that a match can be made for only by one of the parties offering a percentage differential for the price change of the favored stock. In other words, it could be that a believer in Apple’s stock would have to bet that AAPL would have a relative performance of 150% better than the SP500 index in the period to attract a counterparty. The level of premium could of course be negotiated.

All investors and speculators in securities must have opinions as to the relative performance of stocks and markets. Betting on the relative performance of such can be fun, exciting, and highly profitable for the winners, with losses limited to the amounts bet.

 

Arthur Lipper, Chairman                          arthurlipper@gmai.com
British Far East Holdings Ltd.