Hedging is a term that describes a betting strategy where the bettor bets on the opposite side or outcome of their original bet, in order to reduce their losses or secure their profits. Hedging is also known as locking in, covering, or guaranteeing. Hedging is a common and useful way of managing risk and uncertainty in betting, especially in volatile or unpredictable markets or events.
Choose the original bet that you want to hedge. You can select from any bet that you have already placed or are about to place, such as a moneyline, point spread, totals, props, or futures bet.
Choose the opposite bet that you want to place as a hedge. You can select from any bet that is available and compatible with your original bet, such as a moneyline, point spread, totals, props, or futures bet. The opposite bet should have a different outcome or side than your original bet, such as the other team, the other player, the over, the under, etc.
Check the potential payout and the odds of both bets. The potential payout is the amount of money that you can win if the bet is successful. The odds are the ratio of the payout to the stake. The odds and the payout of both bets may vary depending on the bookmaker, casino, or betting platform that offers them, and may change over time as the market or event progresses or approaches.
Enter the stake that you want to wager on both bets. The stake is the amount of money that you risk on the bet. The stake of both bets may vary depending on your budget, goals, and risk appetite. You can use various formulas and calculators to determine the optimal stake for both bets, such as the Kelly criterion, the arbitrage formula, the hedge calculator, etc.
Confirm and place both bets.
The outcome and payout of your hedging will depend on the results of both bets. There are three possible scenarios:
Scenario 1: Both bets are correct. You win the full payout of both bets, which is equal to the sum of your stakes multiplied by the odds of both bets.
Scenario 2: Only one bet is correct. You win the payout of the correct bet, and lose the stake of the incorrect bet. Depending on the size and the odds of both bets, you may end up with a net profit or a net loss.
Scenario 3: Both bets are wrong. You lose your entire stakes and receive no payout.
Examples of Hedging Bets
Here are some examples of hedging bets with different sports and types of bets:
Example 1
Hedging a football game with a moneyline bet and a point spread bet:
Original bet: $100 on Dallas Cowboys to win at +200 odds
Opposite bet: $50 on New York Giants +7.5 at -110 odds
Potential payout: $200 for the original bet / $45.45 for the opposite bet
Hedging: $150 in total stakes
Scenario 1: Dallas Cowboys win by more than 7.5 points. You win both bets and receive $245.45 in total payout.
Scenario 2: Dallas Cowboys win by less than 7.5 points. You win the original bet and lose the opposite bet. You receive $200 in payout and lose $50 in stake, resulting in a net profit of $150.
Scenario 3: New York Giants win or lose by less than 7.5 points. You win the opposite bet and lose the original bet. You receive $45.45 in payout and lose $100 in stake, resulting in a net loss of $54.55.
Scenario 4: New York Giants win by more than 7.5 points. You lose both bets and receive no payout.
Example 2
Hedging a basketball game with a totals bet and a props bet:
Original bet: $100 on over 220.5 points at -110 odds
Opposite bet: $50 on under 50.5 points for LeBron James at +120 odds
Potential payout: $90.91 for the original bet / $60 for the opposite bet
Hedging: $150 in total stakes
Scenario 1: The game has more than 220.5 points and LeBron James has more than 50.5 points. You win both bets and receive $150.91 in total payout.
Scenario 2: The game has more than 220.5 points and LeBron James has less than 50.5 points. You win the original bet and lose the opposite bet. You receive $90.91 in payout and lose $50 in stake, resulting in a net profit of $40.91.
Scenario 3: The game has less than 220.5 points and LeBron James has more than 50.5 points. You win the opposite bet and lose the original bet. You receive $60 in payout and lose $100 in stake, resulting in a net loss of $40.
Scenario 4: The game has less than 220.5 points and LeBron James has less than 50.5 points. You lose both bets and receive no payout.
Pros and Cons of Hedging Bets
Hedging bets can have some benefits and drawbacks for bettors. Some of them are:
Pros:
They can reduce or eliminate the risk and uncertainty of betting, as they can guarantee a profit or minimize a loss regardless of the outcome.
They can protect or secure the profit or return of the original bet, as they can lock in the winnings or avoid the losses before the market or event changes or ends.
They can allow the bettor to change or adjust their opinion or preference based on new information or developments, as they can switch or hedge their bets accordingly.
Cons:
They can lower or limit the potential profit or return of the original bet, as they can reduce the winnings or increase the losses by placing the opposite bet.
They can involve more cost or complexity than regular bets, as they can require more money, time, or research to place and monitor the opposite bet.
They can be influenced or affected by external factors that are beyond the control of the bettors, such as odds movements, betting limits, or betting restrictions.
To Sum Up
Hedging is a term that describes a betting strategy where the bettor bets on the opposite side or outcome of their original bet, in order to reduce their losses or secure their profits. Hedging is also known as locking in, covering, or guaranteeing. Hedging is a common and useful way of managing risk and uncertainty in betting, especially in volatile or unpredictable markets or events. Hedging works by choosing an original bet and an opposite bet that have different outcomes or sides, and placing both bets with different stakes and odds. Hedging can have some pros and cons for bettors, depending on their goals and preferences.