How to Hedge 101

How to Hedge 101

As any experienced gambler knows, no wager is safe until the final whistle. Whether one is looking to guarantee profits on a given wager, or protect their potential downside on a bet likely to lose, hedging can be a worthwhile strategy that many gamblers practice when the opportunity presents itself.

What is hedging?

In essence, hedging is the practice of placing an additional wager on the opposite team of a game that you have already placed a bet on. Many gamblers swear that hedging is a losing proposition in the long run, however in unique situations, hedging provides gamblers a way to take some exposure off their original bet, locking in a profit.

This practice is very popular with futures wagers, as the odds that were locked in on the original bet generally range from 10-1 or significantly higher.

Hedging is also very popular with the addition of “live-line” betting that most legal sportsbooks offer nowadays.

Additionally, hedging is a common practice used with parlay betting, as many parlays return 4-1 or higher when the final game hits in the gamblers favor.

When does Hedging make sense?

To lock in a guaranteed profit on a previously made bet. Let’s propose a scenario:

You believed that the 49ers had a decent chance to win the Super Bowl back in November. At the time your sportsbook offered odds of 15-1 for the 49ers to win the Super Bowl. Liking the value offered, you placed a wager of $100, with the potential return netting a total of $1,500 – should the 49ers win.

Flash forward to February, and the 49ers are facing the Kansas City Chiefs in the Super bowl. If the 49ers come out on top, your $100 bet gets cashed out for $1,500 – what a score! This being said you still have to get through the Chiefs, and your opinion on the game is that it could go either way.

This situation presents a perfect opportunity to hedge – You know that if the 49ers win this game, you cash in for $1,500. What you can do before the game is place an additional wager of $750 on the Kansas City Chiefs to win at +100. This way, if the Chiefs win you cash in for $750 of profit minus the $100 you originally bet on the 49ers, netting you a healthy profit of $650. This being said, if the 49ers were to win this game, you would cash in for $1,500 of profit minus the $750 you bet on the Kansas City Chiefs before the game, netting you a healthy profit of $750.

Through the practice of hedging, you took an all or nothing proposition of $1,500 or nothing, and instead guaranteed yourself a profit of at least $650 no matter which way the game ends up.

To protect your parlay wager

The same scenario explained above applies to parlay bets as well. If you place a 4-team parlay, and the first 3 games have already hit, you have the opportunity to hedge the final leg of the 16-1 payout, guaranteeing yourself a profit.

When your team is winning during any part of the game

The same idea of hedging holds true in game to game wagering. Due to the implementation of live line wagering, if the team you placed a bet on before the game is winning by a substantial amount, you can place a hedging wager on the other team at +300 or higher odds, ensuring that no matter how the game ends up, you are guaranteed to make a profit.

Your speculation on the game has changed

Let’s say that you are not feeling so sure about the over bet you placed yesterday on the NFL game taking place today. Maybe it snowed all night and your opinion of the likelihood of a high scoring game has changed. Hedging the under of that game may not guarantee yourself a profit, but it can reduce your exposure on the game simply to the vig rather than the entire wager.

Conclusion

Hedging has been a tactic that experienced gamblers have used to reduce risk for decades. Many people argue that in the long run it doesn’t make sense, in the short term it gives you the opportunity to guarantee profits and reduce risk on any given wagering opportunity. If you can withstand the volatility of larger swings in your bankroll, SGG would advise not to hedge your bets, however knowing how to hedge correctly is a pivotal tool that all experienced gamblers should have in their arsenal.

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