In essence this is value betting, but a different kind of value betting where you attempt to identify the offender, and then at least in my case wait for the odds to shorten and then cash out even before the event starts. That is how I attempted it, so you can in a way call it a 'semi-arb' that identifies the offender, trades that as a value bet without hedging the other side, and then wait for the odds to shorten so you can cash out. Even in the instance where you dont have a cash out option, you will still be able to hedge yourself before the start of the event as the hedge side of the arb is the real true value which will stay there. Also, this is another way of identifying potential 'palps' in your arb which I have also done a few times, and every time it turned out to be a palpbarbero wrote: Yay, that's it! Interesting thoughts majkara. I mean something like that, but not necessarily counting on a cash-out option, rather letting it run. The idea is the same though.
What I wanted was to encourage some thought & discussion but in order not to confuse any newcomers, I must say that I believe luctens' way is the absolutely right way to go unless you are VERY sure - and even so - of what you are trying to do. Else, you will be running unnecessary risks which go against the whole purpose of arbing - removing risks.
Let me know how you get on with this strategy and if you do decide to actually let the bet run, which is not what I would recommend, unless you gear your whole strategy towards this approach.