How to Hedge a Bet
Categories: Betting Basics |
How To Hedge A Bet
Hedge Betting Explained
Hedge betting or “hedging” is a betting strategy applied by betting professionals as a means of reducing risk and securing assured winnings.
Here’s how to use hedge betting in sports betting.
To hedge or not to hedge, that is the question…
For the purposes of this post we will use the example of hedge betting an NBA Championship futures market.
Remember that hedge betting can be used in any market, and is often a popular strategy on the final leg of a parlay bet, where you may decide to bet against your final leg to assure profit regardless of the outcome of the final leg of your parlay.
Predicting the winner of an NBA Championship futures market is a risk. Even when there is a clear favorite in the market, betting on short odds involves tying up a large portion amount of your bankroll for the duration of the NBA season, at a high risk and for often small payouts.
Instead of identifying the outright MLB World Series winner, we explain how to make a profit in outright markets even before the competition is over through a common hedge betting strategy.
Skip to the bottom to find our Hedge Betting Calculator.
Hedge betting to assure profit
Hedge betting is the practice of wagering on a different outcome, or outcomes, subsequent to an original bet to create an outcome where there is assured profit, regardless of the outcome of the original wager.
For those familiar with arbitrage betting, which also involves the practice of placing wagers on different outcomes for assured profit, there are two main differences between Hedge Betting and Arbitrage Betting..
What are the differences?
- The goal of arbitrage betting is to spot variances between odds offered by sportsbooks and to then place bets on all possible outcomes to assure profit. This is a pretty complicated and time consuming practice that requires going back and forth through multiple sportsbooks.
- Hedge betting on the other hand involves taking advantage of changes in odds in a market, or betting against your original bet, and requires only one betting account. (Some sportsbooks welcome this practice, while others may ban players who use this strategy long-term).
Read on to find out how profit from hedging with our example of the NBA Championship Winner.
Hedging in practice
Hedging on the NBA Championship market is a common strategy during and prior to the NBA season. Before you open your sportsbook account however, you must understand how a hedging strategy works.
Here’s the example of hedging an NBA Championship Winners bet.
“hedging” is the practice of betting on different outcomes of a betting market to assure a profit regardless of the result of the original bet.
During the 2016 NBA season, Cleveland were a very good team, who many thought could push their way deep into the NBA Playoffs, but perhaps not considered a chance for the title after a bad year in 2015, especially against the in-form Golden State Warriors.
Cleveland surprised when they made their way to the 2016 NBA Finals against Golden State, and luckily for those who wagered on them at +650 ($7.50) to be Champions before the season, they were in the running to win the Championship.
Let’s say, in this example, that you had wagered $100 on Cleveland to win the NBA Championship at opening odds of +650. That would give you a payout of $410 if they won the NBA Championship. As Cleveland made their way through the Playoffs and reached the NBA Final against Golden State, the odds for Golden State to win the NBA Championship were at -117, providing a great opportunity for assuring a profit regardless of the Cleveland vs Golden State matchup.
To achieve a return regardless of which team wins, you have to divide the return of the initial bet by the price of the opposite outcome. Here’s how the calculation of profit works:
This example shows how the correct assessment of the performance of a player offered the opportunity of a guaranteed profit in the outright market of the NBA Championship, assuring a profit of more than $244 for a risk of only $100, as well as the luxury to enjoy the NBA Final with the knowledge that you already have a profit.
Adjusting the hedge to your advantage
To make it even more interesting, hedge betting also allows you to distribute the risk, and hence your winnings, based on your judgment of the outcome.
Let’s say that you believed Golden State would win the NBA Championship and wanted to secure a larger profit. To achieve this, you would need to increase the bet wagered on the Warriors.
Here’s a way to distribute the profit in favor of the outcome of Golden State to win by placing $200 on Golden State at -117 ahead of the NBA Finals.
In this scenario, you make a net profit of $255 without increasing your risk of $10. Had you wagered the same amount on the Warriors to win the Finals prior to the season starting at -117, you would have acheived a small profit of $85 and a lot more stress until they secured the title.
Hedge Betting Calculator
Why not do it the easy way with our Hedge Betting Calculator below.
How to use the Hedge Betting Calculator –
Enter the stake and payout of the original bet along with the odds of the other side of the bet (your hedge).
The Hedge Betting Calculator will determine the optimal stake for the new bet to maximize guaranteed profit.
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