Photo: John Netto
From his Las Vegas home, John Netto will be watching the Super Bowl in front of eight computer screens — making sports bets as the plays unfold.Normally the set up is used to make day trades, but since sports betting is legal in his home state, he will take full advantage of that during the Super Bowl.
As president of Quantitative Sports Strategies, Netto is the focus of an upcoming CNBC feature on The Fast Money Halftime Report.
Netto, who is an independent trader and president of M3 Capital, estimates over $90 million will be legally wagered on Super Bowl XLVI between the New York Giants and New England Patriots in Nevada alone. Globally, $15 billion will be wagered, Netto added.
That’s why during the Super Bowl, Netto will bet the same way he trades.
It's time to reflect. Good traders and sports bettors stay calm and focused, Netto said. They learn from their mistakes and are always looking to grow and evolve. They both have to make split-second decisions, so it's critical to be well-prepared.
Before both events there is a huge buzz over what is about to happen. Both require an understanding of the dynamics involved.
There is a lot of excitement and adrenaline. This is also the first indication of how the event will unfold. Will the market rally or sell off? Will the quarterback be on his game or fold under the pressure?
Risk is in the DNA of any professional sports bettor and trader. In order to make money they need to take on risk, but wagering too much on a play can devastate their bankroll. No matter how confident you are about the outcome of the Super Bowl or where the stock market is headed, over-exposure can leave a professional speculator looking for a new job.
Flexibility is a key ingredient in becoming a great trader or sports bettor. The market will not react or move in the way we think it should. Sports teams may not play in the way we think they should.
Yes, that's totally frustrating, especially if you have money on the line.
Having the ability to recognise this and either get out of the bet or exit the position is a critical component to being successful.
Halftime and lunchtimes are a time for peace and calm if you are a sports investor or a Wall Street trader.
Wall Street traders use lunch to go over the mornings trades and figure out a strategy for the afternoon.
Your friends will likely be filling their salsa bowl and drinking another beer. But if you're betting, you'll likely be placing second-half wagers and contemplating what adjustments both sides are making at half time.
'A number of the same mathematics and modelling which goes into pricing options can be applied to making a market, or a point spread, on an in-game basis as well. The non-linear nature of time decay of an option during the final few days before expiration can greatly resemble the dying seconds of a football game where the winner has yet to be determined,' Netto said.
Traders and sports bettors must have sharp instincts and rely on their intuition a lot. Many times the right trade or bet comes naturally and goes beyond the numbers. Intuition helps helps you see a market that is selling and ready for a rally, or a team that has been playing poorly and is about to turn it around.
Many of these skills are developed over long periods of time with lots of experience.
Netto told us:
- The first thing we will work off of is what is the closing point spread and over/under is. As of now the total points scored is forecast at 55 and New England is a 'soft' 3 point favourite, meaning there are more bets on the Giants +3 than New England -3 and as a result the Las Vegas Sports books are making you pay more to get +3 with the Giants than to give -3 with New England.
- The four most important factors when making an in-game number are: 1. what the current score is, 2. how much time is left in the game, and 3. who has the ball and 4. what is their field position?
Netto told us:
If it's the first quarter and New England goes down the field and scores a touchdown with 11:20 left, the adjusted in-game point spread will be New England up from -3 +110 to New England -7 -110. The total will also adjust and go from 55 to 59.
Then say the Giants take the next possession and drive 7 plays to midfield and are forced to punt back to New England and New England starts their next drive at the 20 yard line with 8:20 left. The total will drop back to 55.5, and New England now goes from -7 -110 in-game favourites to -9.5 -110.
On the next play Brady completes a 40 yard play to Wes Welker and now the Patriots have the ball at the NY Giants 40 yard line. The total will adjust to 58.5 and New England is now -11 -105.
The Patriots end up settling for a FG on this drive and lead 10-0 with 4:30 left in the first quarter. The updated total will be 58 and New England will be -10 -105.
Keep in mind under this scenario, the Giants will be receiving the next kick off and the kick off to start the 2nd half so in essence have a two-for-one possession advantage getting points.
So let's fast-forward to the end of the first half. The Giants have come back to take a 17-13 halftime lead. The total points of 30 and underdog Giants leading by 4 at halftime will see an adjusted in-game price of NY Giants -3 with a total of 57.5 (-116 to the over).
In essence, the second half would have New England as a 1 point favourite, putting a Giants 3 pt victory as the break even point, and a total of 27.5 points.
Netto explains 'there has been a seminal change in the sports betting world with the proliferation of in-game wagering, or betting on the outcome of a game on a play-by-play basis. Technology has played a major influence, as the demand for more customised media allows many fans around the world to view and wager on the events involving their favourite teams. This is analogous to the transformation which took place as electronic trading has become the primary driver of volume at most exchanges, replacing trading pits in this capacity over the last decade.'
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