F1: Championship now, Japan later

After 15 races completed for the Formula 1 Championship, the title of the F1 2008 champion seems to being decided, while the F1 racing teams prepare for the visit to Japan. With 3 more circuits left in the F1 2008 calendar (China and Brazil), Lewis Hamilton has 84 points, Felipe Massa 77 and Kubica and Räikkönen follow up with 64 and 57. Is it now an appropriate time to back Hamilton or would we better chasing an outsider like Massa?

About 6 months ago when the F1 2008 championship started, the favorite for winning the first place was Kimi Räikkönen. According to the Betfair trading charts, there were more than €50,000 matched at around 1.40, and more than €200,000 were placed under 2.00. The online betting odds on Räikkönen took off though in the following weeks and now he is far away from the first places, ranking fourth and being traded at 170.

Its place as a favorite to win the F1 2008 championship took Hamilton, who although started at 3.50-4.00, he managed after a lot of variance to be found in the first position and his online betting odds to be fluctuated around 1.35 at the moment. Surprisingly during the middle stages of the championship the odds on him had reached 8.00! I should also note that the largest percentage of the market’s volume has been attracted to him with more than €800,000 matched on Hamilton.

Worth noting is also the Massa’s online betting odds movement. The worst period was in the first races (the odds were 22.0!), however he eventually was a perfect opportunity to be traded profitably for all those backers, since in the latest races he performed quite well and at one time his odds had been lower than 2.00! Meanwhile, the layers who put their money against him, they should be worrying as he is just a few points behind the first place and his odds are relatively short (4.00). For those who haven’t placed any money on the market, and considering the 7 points between Massa and Hamilton, those odds might seem promising.

For the time being we don’t have a clear picture of the teams’ performance in Japan, since the first official practice takes place in 5 days’ time. Obviously if we study the latest news, the teams’ and drivers’ performance, the historical data of the 3 last races and the general headlines and rumors found in the web, we can judge much more effectively for the drivers’ condition and which scenario seems more likely.

Applying such a tactic, we can start our trading from now either backing Hamilton (or laying Massa), or laying Hamilton (or backing Massa). Of course it is totally acceptable to lay both favorites and chase after the outsiders, Kubica and Räikkönen. Whatever we decide to do though, the trading possibilities offered in Betfair trading market are of huge importance and we can’t afford to neglect them.

For instance, if we trade before the Japan’s race for the F1 2008 championship by backing Hamilton, which are the possible outcomes of the race? He can either take back 10 points and almost secure the championship title, win 1 to 8 points, or in the worst case not win a single point, allowing his competitors to catch up or even pass him by. Is it possible however Hamilton to lose the lead?

Truth is the 7 points between him and Massa are more than enough to consider such a scenario unlikely. He should either not win any points and Massa to finish first or second, or win 1-2 points and Massa to win the race. In any other case after the completion of the Japanese circuit, Hamilton will still lead the championship race. What does this mean for us?

That means his online betting odds to win the F1 2008 title after Japan will still be under 2.00 with a big certainty. So if we risk $100 by backing Hamilton and believe that there’s 5% chance to lose the lead (according to the scenario above), we would still have placed our money on the favorite, on shorter odds though. If we consider the worst case to be the online betting odds to reach 2.00, then by laying $70 at 2.00 we stand to lose $30 on all possible drivers. Therefore by 95% (personal estimation) we would risk $30. What are the rewards for such a risk?

If Hamilton wins in Japan and Massa doesn’t get any points, then Hamilton’s odds are expected to shorten below 1.10 and we stand to win $20-30 before the 2 last F1 races. That case along with the scenario of Hamilton not getting any points and Massa winning are the most extreme cases and they are going to happen only a small fraction of the time. The most likely scenarios are his online betting odds to be between 1.20 and 1.70 after the Japan’s race. In all those results we are being given a lot of freedom to manipulate our trading before the 2 last races.

With this article I wanted to make the possible courses of action we can take in Betfair trading clearer. Certainly we can all go and bet on Hamilton next Sunday to win the Japanese circuit (2.72 odds now) and wait for the results. On the other hand though we would risk all our money in a race of 1.5 hour where anything is possible. If we bet however in a more “long run” way, we will have plenty of time to react (many days before the next F1 race), be more calm not to make decisions in the heat of the battle and generally trade more efficient.

Additionally, we should not foget the possibility to combine our bet placed in the Japan trading market with the one we would have placed for F1 2008 champion (e.g. a probable combination would be to back Hamliton for F1 2008 champion and back Massa for Japan's race winner with different amounts, so that we close our trading according to the race's progress). In this way, we can control our risk exposure, take advantage of both trading markets and minimize our exposure to unstable factors.

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