Abstract: This invention relates to novel options-based financial instruments, and a related system and method that automates market trading of the novel instruments. The invention protects positions against short-term market movements by inducing users on the opposite sides of a transaction to trade in equal or near equal dollar volumes. The system includes an automated price quotation capability for the instruments, that operates at computer speeds, without human intervention—specialists and market makers are not necessary. Through the use of feedback techniques, the system induces traders on the opposite sides of a transaction to trade in near equal numbers of round lots, minimizing the system's financial exposure from unbalanced trading. The system also fully automates the trading of the financial instruments themselves, plus the attendant functions (inventory control, billing, reporting, etc.), so that users may interact with the system on-line, without human intervention.

Abstract: Improvements are described for a data processing system and method that allows a betting "house" to maintain a betting pool on a contest involving two or more contestants by controlling the terms (the betting odds and/or handicaps) for the contestants so that bettors are encouraged to place bets that will bring the betting pool (the "book") into balance. The system and method provides for "hedging" of bets in light of changing betting terms, such that bettors can guarantee profits or minimize losses before the contest is complete. Incoming bets may be placed in a queue before being processed, and their effect on pool balance evaluated before accepting or rejecting the bets. Bets in the queue may be accepted only in matching sets on all of the participating contestants, so as to prevent any imbalance of the betting pool. Alternatively, the bets may be rejected with an indication of the change in betting terms which would be required if the bets are to be accepted.

Abstract: A data processing system and method is described that allows a betting "house" to maintain a betting pool on a contest by controlling the terms (the betting odds and/or handicaps) for the contestants so that bettors are encouraged to place bets that will bring the betting pool (the "book") into balance. The data processing system and method provide for maintaining a betting pool having certain betting terms. In particular, the data processing system, which includes a central processor and a storage device, calculates an imbalance of the betting pool, determines on the basis of predetermined criteria whether to change the betting terms, and changes the betting terms accordingly.