Back, lay and greening up

The question

"I backed a team at 3.0 and they've scored. The price is now 2.0. How do I green up on Betfair and lock in profit whatever happens?"

This lesson shows how to green up on Betfair. On an exchange you can bet both ways. You can back (bet that something happens) and lay (bet that it doesn't). Once the price moves in your favour, a lay of the right size turns your bet into a guaranteed profit.

The idea in one sentence

Lay the same selection at the new, shorter price with a stake of back stake × back odds ÷ lay odds, and you win the same amount whatever the result.

The picture

A back bet and a lay bet are mirror images:

Every matched bet has one agreed price. When you back at 3.0, someone else has laid at 3.0, and vice versa.

Now combine them. After backing at 3.0, you lay the same selection at 2.0. If it wins, the back pays and the lay costs you. If it doesn't win, the back loses and the lay pays. Size the lay correctly and those two outcomes come out equal, which Betfair shows in green in both rows. That's greening up.

If the price has moved against you, the same move locks in an equal loss, shown in red. It sounds bad, but it's how traders stop a bad position getting worse.

Worked Betfair example

Brentford are away at 3.0 in Match Odds. You back them for £50. They score first and the lay price on Brentford drops to 2.0. (Illustrative figures.)

1. Your position before greening. If Brentford win: +£50 × 2.0 = +£100. If they draw or lose: −£50. A big swing either way.
2. Size the lay. Lay stake = £50 × 3.0 ÷ 2.0 = £75. Your liability on the lay is £75 × (2.0 − 1) = £75.
3. If Brentford win. Back pays +£100, lay costs −£75. Net +£25.
4. If they draw or lose. Back loses −£50, lay wins +£75. Net +£25.
5. Commission. Betfair charges 2% on your net winnings in the market. Net winnings are £25 whatever happens, so commission is £0.50 and you bank £24.50.
6. Was greening "worth it"? Suppose 2.0 is a fair price, a 50% chance. Riding the bet has an expected value of 0.5 × £100 × 0.98 − 0.5 × £50 = £24.00. Greening gives a certain £24.50. Almost the same: greening removed the risk, not created the value. The value came from backing at 3.0 before the goal.

When the price goes the wrong way

The home side scores instead and Brentford drift to 4.0.

1. Size the lay. £50 × 3.0 ÷ 4.0 = £37.50.
2. If Brentford win. Back +£100, lay −£37.50 × 3.0 = −£112.50. Net −£12.50.
3. If they don't. Back −£50, lay +£37.50. Net −£12.50.

You've locked in a £12.50 loss instead of risking the full £50. No commission is due on a loss.

Lay first, then back

It works the other way round too. You lay Brentford at 2.0 for £40 (liability £40). They drift to 2.5.

1. Back stake = £40 × 2.0 ÷ 2.5 = £32.
2. If Brentford win. Lay −£40, back +£32 × 1.5 = +£48. Net +£8.
3. If they don't. Lay +£40, back −£32. Net +£8, or £7.84 after commission.

The formula

Green up after backing

• L is the lay stake to place.
• S_b is your original back stake.
• O_b is the odds you backed at.
• O_l is the current lay price.

In plain English: lay a stake equal to your back bet's total return divided by the new price.

The locked result

• The symbols are as above. Positive means a green (profit), negative a red (loss).

In plain English: the locked profit is the difference between the two stakes. If it's positive, take off 2% commission to get what you bank.

Green up after laying

• B is the back stake to place.
• S_l is your original lay stake, O_l the odds you laid at, and O_b the current back price.

In plain English: the same idea in reverse. If the price has drifted since you laid, backing at the bigger price locks in a profit; if it has shortened, backing locks in a smaller, equal loss.

Try it

Enter a £50 back at 3.0 and a current lay price of 2.0 and check you get a lay stake of £75 and £24.50 either way after commission. Then slide the current price above 3.0 and watch the green turn red.

Common mistakes

• Laying the same stake as you backed. Laying £50 at 2.0 gives +£50 if Brentford win and £0 if they don't. That's a hedge, but not a green: the profit all sits on one outcome.
• Thinking greening adds value. Your edge came from the price you backed at. Greening at a fair price just trades the upside for certainty.
• Greening every time out of fear. If your bets have value, greening all of them early gives some of that value back on every trade. Decide your exit rules before you enter.
• Forgetting commission on the green. At 2%, a £25 green banks £24.50. Small, but it applies to every winning market.
• Using the wrong column. To lay you take the price shown in the lay (pink) column, and to back you take the back (blue) column. Size the hedge on the price you'll actually be matched at.

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