Glossary
Risk & Strategy
Underdog Investing

Buying shares of teams with low championship odds that offer high potential returns if they win.

Definition

Underdog investing is a high-risk, high-reward strategy focused on purchasing shares of teams with low championship probability. Since stock prices are tied to odds, underdogs have cheap share prices. If an underdog defies expectations and wins the championship, the $100 payout per share represents an enormous return on a small investment. The trade-off is that most underdogs will not win, making this strategy risky without proper diversification.

How This Works on Sporty Stocks

On Sporty Stocks, an underdog might have a 2-3% championship probability, pricing their stock at just $1.90-$2.85 per share. If that team pulls off a Cinderella run and wins the championship, each $1.90 share pays out $100 - a return of over 50x your investment.

Example

You buy 500 shares of a longshot NHL team at $2.00 each ($1,000 total). If they win the Stanley Cup, you receive $50,000 (500 x $100). Even buying a small position in several underdogs gives you a chance at a massive payout.

Frequently Asked Questions

How much should I invest in underdogs?

A common approach is to allocate 10-20% of your portfolio to underdog bets while keeping 80-90% in more likely contenders. This gives you exposure to big payouts without risking your whole portfolio.

Related Terms

Start Trading on the Sports Stock Market

Put your knowledge into practice. Get $10,000 in play money and trade NFL, NHL, and NBA team shares.