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Apple 7-1 stock split

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  • 24-04-2014 2:16pm
    #1
    Reillyman
    Closed Accounts Posts: 834 ✭✭✭


    Apple announced a 7-1 stock split yesterday, meaning the share price will more or less be divided by 7. It's at ~$525 at the moment so after the split it will be ~$75.

    PP had a market where you could bet on where Apple's share price at year end. I manged to get it at $400 or less at 11/2. Will they pay out?

    The terms say:

    "Singles only: Applies to the share price listed for Apple after closing on 31st December 2014."


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    #2
    NewApproach
    Registered Users Posts: 2,185 ✭✭✭NewApproach


    Reillyman wrote: »
    Apple announced a 7-1 stock split yesterday, meaning the share price will more or less be divided by 7. It's at ~$525 at the moment so after the split it will be ~$75.

    PP had a market where you could bet on where Apple's share price at year end. I manged to get it at $400 or less at 11/2. Will they pay out?

    The terms say:

    "Singles only: Applies to the share price listed for Apple after closing on 31st December 2014."

    Unless they've set out a specific condition to the bet regarding stock splits, they kind of have to, don't they?


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    #3
    Reillyman
    Closed Accounts Posts: 834 ✭✭✭Reillyman


    They changed the odds on my betslip to 1/500.

    I rang them to complain and they first said it was due to a "technical error" with the price display. They said that when I placed the bet the "quoted price" was different to the "right price."

    My argument was that what exactly is the "right" price at that time, is it the "intrinsic price" that retrospectively, would be the correct price at the time, or is the "right price" what PP thought internally it should have been at the time. There's a big difference.

    Basically I asked for some kind of confirmation on when PP internally changed the price. If it was after the time of my bet I said they'll have to pay out, if they internally changed the price before the time of my bet, and it was displayed incorrectly on the website, then I'll accept the bet being voided.


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    #4
    NewApproach
    Registered Users Posts: 2,185 ✭✭✭NewApproach


    Reillyman wrote: »
    They changed the odds on my betslip to 1/500.

    I rang them to complain and they first said it was due to a "technical error" with the price display. They said that when I placed the bet the "quoted price" was different to the "right price."

    My argument was that what exactly is the "right" price at that time, is it the "intrinsic price" that retrospectively, would be the correct price at the time, or is the "right price" what PP thought internally it should have been at the time. There's a big difference.

    Basically I asked for some kind of confirmation on when PP internally changed the price. If it was after the time of my bet I said they'll have to pay out, if they internally changed the price before the time of my bet, and it was displayed incorrectly on the website, then I'll accept the bet being voided.

    I'd be looking for the exact T&C of the bet at the time it was struck.


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    #5
    Reillyman
    Closed Accounts Posts: 834 ✭✭✭Reillyman


    As I've discovered, it's not an issue with the terms of the bet, they will pay out to anyone who had bet on the share price being $400 or less before the announcement yesterday, likewise anyone who bet on above $400 will lose their bet.

    The issue is the fact that at the time my bet was placed, they reckon the wrong price was displayed on the website, that it should have in fact being displayed at 1/500. My argument is that when does their "internal price" change (the price at which their trader/statistician/software calculates what they should be offering the price at).

    There are three key time points in this;

    1) t = 9.31pm when Apple announce the stock split.

    2) 9.31pm < t < "The time their internal price is changed by trader/statistician/software"

    3) "The time their internal price is changed" < t < "Time when the new price was displayed correctly on the website."

    So basically, if the time I placed the bet falls in the third time-frame, I'm happily accept the 1/500, but if the time I placed the bet falls in the second time-frame, then I would expect that under all terms and conditions that I should receive the price of 11/2.


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    #6
    NewApproach
    Registered Users Posts: 2,185 ✭✭✭NewApproach


    I misunderstood, I thought you placed the bet ages ago. If you placed the bet after Apple's announcement, 11/2 is quite clearly a mistake, so palpable error rules apply.


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    #7
    Reillyman
    Closed Accounts Posts: 834 ✭✭✭Reillyman


    So in that sense, say they realised around 10pm that the stock-split would massively decrease the share price, they can retrospectively go back on all bets placed between 9.31pm and 10pm and say "If we had realised at 9.31pm what was happening the price would have been 1/500, so that's what we're giving you."

    Could the same logic not be applied to any market?

    If for example there is a golf tournament coming up that has two big favorites. You hear on the news that, for example, a certain golfers close relative dies, so you know he won't be playing in the tournament the following weekend. You then bet on the other favorite, at say 2/1 who is now certain to win the tournament. Could the bookie say three hours later, "if we had realised three hours ago what affect this would have, the price would have been 1/50, so that's what we're giving you."


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    #8
    [Deleted User]
    Posts: 25,611 ✭✭✭✭ [Deleted User]


    Reillyman wrote: »
    So in that sense, say they realised around 10pm that the stock-split would massively decrease the share price, they can retrospectively go back on all bets placed between 9.31pm and 10pm and say "If we had realised at 9.31pm what was happening the price would have been 1/500, so that's what we're giving you."

    Could the same logic not be applied to any market?

    If for example there is a golf tournament coming up that has two big favorites. You hear on the news that, for example, a certain golfers close relative dies, so you know he won't be playing in the tournament the following weekend. You then bet on the other favorite, at say 2/1 who is now certain to win the tournament. Could the bookie say three hours later, "if we had realised three hours ago what affect this would have, the price would have been 1/50, so that's what we're giving you."
    Yes. They can pretty much do as they like.


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    #9
    NewApproach
    Registered Users Posts: 2,185 ✭✭✭NewApproach


    Reillyman wrote: »
    So in that sense, say they realised around 10pm that the stock-split would massively decrease the share price, they can retrospectively go back on all bets placed between 9.31pm and 10pm and say "If we had realised at 9.31pm what was happening the price would have been 1/500, so that's what we're giving you."

    Yes, although you usually also have the option to void the bet.
    Reillyman wrote: »
    Could the same logic not be applied to any market?

    Pretty much, yes. For the rule to apply it needs to be a clear and obvious error.
    Reillyman wrote: »
    If for example there is a golf tournament coming up that has two big favorites. You hear on the news that, for example, a certain golfers close relative dies, so you know he won't be playing in the tournament the following weekend. You then bet on the other favorite, at say 2/1 who is now certain to win the tournament. Could the bookie say three hours later, "if we had realised three hours ago what affect this would have, the price would have been 1/50, so that's what we're giving you."

    This is a poor example as golfers would never shorten by any significant amount due to the withdrawal of a player. If it was a 2 or 3 ball, the bet would be void.

    A more realistic example is betting a team in running after they have scored at the price they were before the goal. The price would rightfully be corrected.


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    #10
    Reillyman
    Closed Accounts Posts: 834 ✭✭✭Reillyman


    Deleted User wrote: »
    Yes. They can pretty much do as they like.

    It's an absolute balls in fairness if that's the case.

    I 100% understand that they would rightly be entitled to do this in cases where there is insider information, or if an event such as a local football game has taken place a day early or something, because that is clearly an error.

    In this case though the information was available to absolutely everyone, no side of the bet had any extra information or was in any way at a disadvantage/advantage, and it wasn't as if the bet was placed immediately as it was announced, it was at least 40 minutes later.


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    #11
    Reillyman
    Closed Accounts Posts: 834 ✭✭✭Reillyman


    NewApproach wrote: »

    Pretty much, yes. For the rule to apply it needs to be a clear and obvious error.

    Is ignorance to a publicly available fact considered an error in this case?


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    #12
    NewApproach
    Registered Users Posts: 2,185 ✭✭✭NewApproach


    Reillyman wrote: »
    Is ignorance to a publicly available fact considered an error in this case?

    Yes of course. A very obscure market wasn't suspended in time.


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    #13
    whiteshorts
    Site Banned Posts: 880 ✭✭✭whiteshorts



    A very obscure market wasn't suspended in time

    Not the 1st time that has happened! ;)

    Would have thought it they changed the price and it didn't change on the site, it's tough as they were still offering the same price 40 mins after the announcement?


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    #14
    Reillyman
    Closed Accounts Posts: 834 ✭✭✭Reillyman


    whiteshorts wrote: »
    Not the 1st time that has happened! ;)

    Would have thought it they changed the price and it didn't change on the site, it's tough as they were still offering the same price 40 mins after the announcement?

    The price went from 12/1 to 8/1 to 11/2 which was what I managed to get it at.


  • Options
    #15
    montyrebel
    Registered Users Posts: 1,426 ✭✭✭montyrebel


    Reillyman wrote: »
    Apple announced a 7-1 stock split yesterday, meaning the share price will more or less be divided by 7. It's at ~$525 at the moment so after the split it will be ~$75.

    PP had a market where you could bet on where Apple's share price at year end. I manged to get it at $400 or less at 11/2. Will they pay out?

    The terms say:

    "Singles only: Applies to the share price listed for Apple after closing on 31st December 2014."


    surely still a bit of time before this can be settled anyway, no?


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