In the world of Binary Betting the buy / sell spread is
determined by the likelihood of an event actually occurring, with a
higher price for an event that is more likely to happen and a lower
price for an event that is less likely to happen.
Prices are quoted between 0 – 100, with 0 reflecting an
impossible event and 100 representing a certainty. The quoted
prices for any binary bet will constantly change to reflect the
market’s shifting views on the probability of that event actually
occurring. However, the price you enter a trade at is fixed at the
time the trade is opened.
For example, you may be considering placing a bet on the FTSE
100 finishing ‘up’ on the day i.e. finishing at a higher point than
the previous days close.
At 3:00 pm, the FTSE might already be up 20 points; in this case
the buy / sell spread could well be 80 - 84, representing a high
probability that the market will finish ‘up’ on the day. By 4:15
pm, the FTSE might be 22 points up on the day and the quoted bid /
offer spread may well have moved to 94 – 96, reflecting the
increased likelihood of the market finishing up at the 4:35 pm
market close.
These binary odds can be converted into the more traditional
fixed odds format of the High Street Bookmaker, as the table below
demonstrates.So at 3pm the 80 – 84 spread would approximately
equate to a fixed odds price of 1 / 5 and the 4.15pm spread of 94 –
96 would approximately equate to a fixed odds price of 1 /
20.
