Hedging Your Bets 101

What does “hedging” mean?

“Hedging” is a betting strategy where you place a secondary bet to guarantee profit on a parlay, teaser, futures, or any other kind of bet that is beyond a standard single bet. You can also hedge a bet if you made a mistake or changed your mind on a bet.

 

Hedging a Parlay Example:

You bet a parlay for 5 teams to win. The first 4 teams won their game and it all comes down to the last team on your bet ticket. If they lose, your entire ticket is loser, even at 4 out of 5 winners. So, you bet against your last and final team. Thus, no matter what happens in the final 5th game, you make a profit.

Let’s say you bet $100 on the 5-team parlay that would reward you a profit of $1,000 if all 5 hit, for a total payout of $1,100.

Your last and final bet on the ticket is for Team 5 to win at -200 odds. Their opponent’s odds to win, or their “money line” is +170. Although Team 5 in this example is favored to win, you don’t want to come away with $0 if their opponent pulls an upset. So, you hedge. In this example, I would place a $400 bet on the opponent’s money line of +170 to profit $680 for a total payout of $1,080. Now, you have $500 total in action. If Team 5 wins, you get your $1,100 payout with $500 total spent, resulting in a profit of $600. If Team 5 loses, you get your $1,080 payout of your hedge bet with $500 total spent, resulting in a profit of $580.

As you can see, no matter which team won the final game of the parlay, you locked in a MINIMUM profit of $580.

 

Hedging Futures Bet Example:

You bet $100 on Team A to win the Championship at 50/1 (or +5000) for a total profit of $5,000 and a total payout of $5,100. Team A makes it to the Championship game (or series) and is now an underdog with a money line of +114. Their opponent if favored to win the Championship game with a money line of -136. You hedge your Futures Bet by wagering $2,500 on Team A’s opponent to win, resulting in a profit $1,850 of with a total payout of $4,350. You now have $2,600 invested in this championship game. If Team A wins, your Futures Bet pays out $5,100, on $2,600 invested, for a total profit of $2,500. If Team A loses, your Futures Hedge pays out $4,350, on $2,600 invested, for a total profit of $1,750.

No matter which team won the Championship, you locked in a MINIMUM profit of $1,750.

 

Hedging a Mistake Example:

This is an easy one. If you bet incorrectly, accidentally, or simply changed your mind on the bet, you can bet against it to only lose the vig/juice on the play. So if you bet on the Over of Game 1, but you meant to bet the Under, you can bet the Under at the same number to cancel out the bet, and only lose the vig/juice (what the sportsbook makes).

$100 on the OVER -110 (accident). Bet $100 on the UNDER -110 (hedge). Unless there is a push (best case scenario) you will only lose $9, instead of the full accidental $100.

This strategy also works with news. If you bet on a team to cover the spread, then find out all of their starters are sitting, you can quickly bet the opposite to cancel it out.

 

In Conclusion:

There will always be people telling you to “let it ride” and “scared money don’t make money”. Unless they have Bill Gates money, then don’t listen to them. The goal for any professional sports bettor is to profit month over month, year over year. If you can guarantee profit, take it. Hedge away. Try to get as close to even stevens on your hedge as possible, but if it’s not equal profit both ways (see Futures Hedge above), it’s fine. Get in our free Betting Chat Room. If you run into a potential hedge situation, you can easily run it by us and see what we think.