Hedging Bets

You may have heard of “hedging” before, but how well do you know this sports betting strategy? Before hedging your bets, you need to fully understand when to consider it and how to use it properly.

What Is Hedging a Bet?

The origin of the phrase “hedging a bet” came from an actual hedge, which is a fence or boundary that encloses a piece of land.

The hedge, which determines an area’s limits, inspired the idea of limited risk. It also gave rise to the phrase “hedging your bets,” a strategy to reduce one’s wager risks.

Think of hedging as a form of insurance. This technique manages your risk exposure by protecting your original wager against potential financial losses.

What Is Hedging in Sports Betting?

Experienced bettors use hedging in sports betting to guarantee a profit from the wager or reduce the risks if the wager loses.

Hedging a bet involves placing one or more bets on the opposite side of an initial bet, which can be similar to middling a bet. This strategy creates a favorable situation, whether your original bet wins or loses.

Even if you think you might win, you could hedge your bet just to be sure you walk away with a profit. Although the win might not be as much, the additional wager is like an insurance in case your original wager loses.

Live wagering platforms are great avenues for sports bettors to hedge their bets, depending on the teams’ real-time performances.

Just like futures betting, hedging is also becoming more popular. Before, bettors would only hedge their bets on futures wagers. Now, you can hedge against more kinds of bets.

Hedge betting is a useful strategy even if sports betting types have different mechanics. For instance, a futures bet is a long-term bet that uses a moneyline.

An individual game uses a point spread, while a moneyline may be used when betting on other sports.

Hedge Betting vs. Arbitrage Betting

Many people get hedge betting mixed up with arbitrage betting all the time. The main difference between hedging and arbitraging is the way these two strategies are used.

Hedge betting involves placing additional bets on outcomes subsequent to the original bet, usually a different outcome opposite the original wager.

The hedging strategy is usually used after a change in circumstances. The purpose of hedging is to either lock in profits or reduce the risks of a loss.

In contrast, arbitrage betting involves placing two or more bets on different outcomes simultaneously. The arbitrage betting strategy can be used to spot a discrepancy between the odds offered by various bookmakers.

The purpose of arbitrage betting is to place bets on all possible outcomes accordingly to guarantee profits.

Opportunities for arbitrage arise when various sportsbooks assign different odds to the same event. Thus, arbitrage betting would not be possible without line shopping.

Line shopping involves browsing different online sportsbooks for the best odds and trying to exploit price discrepancies.

This definition demonstrates just how different hedging is from line shopping.

When and Why Should You Hedge a Bet?

The main advantage of hedge betting is that it can give you extra flexibility in managing your level of risk exposure to wager losses.

If you are close to winning from a parlay, for instance, you can easily use the hedging technique to ensure that you secure profits from all the bets involved.

You can also hedge if you lose on a wager and don’t want to be exposed to that loss anymore. Hedging also helps you reduce the effects of that loss.

The flexibility from hedging can help you practice how to handle and allocate your funds while making surefire bets. This approach is also called proper bankroll management.

The main disadvantage of hedging is that it comes at a cost. Reducing your exposure to betting risks can also mean that you are guaranteed to take a loss.

Even if you can minimize your existing bet’s potential losses, you end up sacrificing the potential profit from that same bet.

Using the hedging strategy to secure profits also has an associated cost. To cover the other side of your bets, you are paying a premium from your potential profits.

Hedging Futures

Futures bets allow bettors to hedge a bet and guarantee profits, whether the original bet wins or loses. It lowers the total amount of money you can win, but it limits the risks.

Hedging your futures bets may not increase your odds of winning, but it can help lock in a guaranteed profit when your futures bet is going well.

For example, you placed a $100 futures bet on the New England Patriots to win the Super Bowl before the season begins.

If the Patriots win the Super Bowl, you will net about $2,000 of profit. If the team doesn't make it to the playoffs or loses early in the postseason, you're going to get $0.

But let's say you want to secure some profit, and you're okay with not getting the full amount. Hedging your bets ensures that you're still going to get some money regardless of the outcome.

You can take any amount from the potential profit and use it to bet on the opponent since one of the two teams is bound to win.

It's up to you to decide how much you want to hedge. You can adjust or even out the numbers based on the possible outcomes.

As the name suggests, a futures bet allows you to wager on who will win an upcoming title or championship, even before the teams have been determined.

For instance, if you placed a bet at the start of the National Football League (NFL) season on who will be the Super Bowl champion, then that is a futures bet. It encourages you to think long-term when you’re placing your sports bets.

Another example of a futures bet is if you bet mid-season on who's going to win the National Basketball Association (NBA) Championship.

You can also make futures bets on individual player awards, such as Major League Baseball’s Most Valuable Player (MVP) awards.

Hedging Parlays

The parlay bet is one of the most common types of bets to hedge. A parlay is a series of single bets combined and is dependent on all of the winning wagers.

You can expect to receive a much larger payout if all the wagers are won rather than placing the bets individually.

The higher the risk or reward, the more likely a bettor should use hedging for a parlay bet. For most small and low-risk parlay bets, hedging should not be used.

The more wagers your parlay bet wins, the higher your odds of winning will be.

For example, you've placed a parlay on the moneyline and have covered three wins out of four teams. You have to win only one more wager to secure the whole parlay profit.

In this scenario, placing a hedge bet on the opposite outcome is a smart move.

Suppose the last game is the Green Bay Packers versus the Dallas Cowboys, and you bet on the Packers in your parlay. In that case, you can place a separate bet on the Cowboys to guarantee a profit.

If the Packers win, you will hit your parlay and profit minus what you wagered on the Cowboys. If the Cowboys win, you lose your parlay wager but still secure a profit.

To get significant profits, the amount you need to wager depends on the moneyline odds in your parlay.

Hedging Due To a Change in Outlook or Opinion

There are instances when your views on the possible outcome of a sports event will change for certain reasons. This change of heart can leave you with even riskier wagers than you initially thought.

Preferences, opinions, players, and teams change, especially those involved in long-term bets. Sometimes, they can also change before the odds do.

In such cases, the hedging technique is an option to reduce the increased risk. The idea here is to place additional wagers to adjust your initial position.

Hedging Due To a Mistake

Even the most experienced sports bettors can make mistakes. When you use hedging to fix an error, it’s rarely about reversing poor betting choices but more about correcting slip-ups when placing a bet.

Seemingly minor errors, such as marking the wrong selection when filling a betting slip in a bookmaking shop or entering the wrong stake when making bets online, could cost you a fortune!

In some cases, they can cost you a lot, as you’re usually not able to cancel a bet once it has been confirmed.

If you’ve made a mistake when placing a wager, keep in mind that the ultimate goal is to reduce the potential cost of your initial error.

First, you can simply let the bet ride and hope that it ends up winning. You’ll have to risk money though, which is not an ideal option.

The alternative option is to use hedging to mitigate potential losses. You can do this by wagering on the other outcome, so you’ll get some money back no matter what the result is.

Note that hedging to fix a mistake is not always simple. For example, if you’re betting on a market with multiple possible outcomes, you’ll have to back all the different outcomes.

If you’re betting on a market with selections involving several odds, you’ll also need to do the math to work out how much is at stake.

Make sure that you cover all possible outcomes to be successful with fixing an erroneous bet. Also, see to it that your potential losses are as small as possible.

Hedging Live, In-Play Bets

You can use the hedging technique for live bets by placing more than one wager on the same game. When you hedge live bets, you either lock in a profit on all results, limit losses, or break even on one or several results.

Online in-play betting or live betting allows bettors to place wagers on sports events that are currently taking place.

There are plenty of hedging opportunities to protect your original bet as live betting lines are continuously updated.

The hedging technique can be helpful when betting in-play, especially if the sporting event looks like it is going to turn out different from what you expected.

Sports bettors can also hedge a live bet on the halftime line. At that point, they may have seen enough of the gameplay to determine how the rest will play out.

There are two ways to view hedging during live sports bets. First, you are limiting your risks and the likelihood of losing money.

Second, you are limiting potential winnings when you spend more money on other bets. Before placing in-play bets, you should first think of what you want to achieve.

Even the safest bets can be vulnerable due to the unpredictability of sports betting markets. In contrast, hedging bets in the long term will be a smart move that reduces your risk.

However, hedging bets in live betting markets has its downside. Finding the right bet while in the middle of the action can be difficult, and determining the right amount to bet can be equally challenging.

When you find an in-play sports bet you can hedge, it’s worth putting in the time and effort so that these bets result in a guaranteed profit.

You can also consider using multiple bookmakers to hedge. If you have more than one account, you can flip between them to find the markets’ best prices.

Hedging To Secure Profits

There are occasions when you can use the hedging technique to guarantee profits. It all depends on the types of wagers you want to place.

Let’s say you placed a wager on the Los Angeles Rams to win at the beginning of the Super Bowl season, and the Rams made it to the finals.

You could hedge your bet by placing another wager on the opponent team to win the Super Bowl.

If your calculations are correct, you could create a favorable situation where you make an overall profit regardless of the winning team.

Hedging to secure profits can also be possible when placing a parlay or accumulator. For example, let’s say you’ve placed a parlay on six football teams.

The first five teams you’ve wagered on all won, and the sixth team has yet to play. If the sixth team also wins, you stand to make a sizable profit.

If the team doesn’t win, you don’t make any profit at all. In this situation, you could place another bet on the opposing team to win, and you would be able to secure an overall profit.

You could either win your parlay if the team you initially backed up wins, or win your hedge wager if the team didn’t.

How to Hedge a Bet

You can hedge a bet by placing a second bet against the original bet. Hedging guarantees that you lock in some kind of profit at the end of a sports event.

There are different ways to hedge your bets, such as a partial bet or a full-time hedge. You can hedge individual games or a futures bet.

One of the most common instances of using the hedging technique is for a futures bet. Below is an example of hedging a futures bet:

Let’s say you placed a $100 futures bet on the Atlanta Falcons to win the Super Bowl at 60-1 odds. Your potential win is $6,000 plus the original wager of $100.

You hedge a $1,000 bet on the Los Angeles Rams to win at 2-1 when they face the Falcons in the big game.

For the best result, the Falcons win, and you win $6,000. You lose the $1,000 hedge on the Rams. Instead of $6,000, the final win is $5,000.

For the hedge win result, the Rams win the Super Bowl, and you win $2,000. Subtract the $100 original wager from the $1,000 hedge, and it gives you a total win of $900.

If you do not hedge and the Los Angeles Rams win, you get the worst result possible: you completely lose the $100 wager and the potential win of $6,000.

Based on this example, hedging on a futures bet is still a profitable bet. The hedge betting strategy protects you from losing all the potential profit from the wager.

Hedging your bet means that the original bet isn’t as advantageous as it could be. Still, the strategy serves the purpose of hedging, which is to win some kind of profit instead of losing everything.

The example also showed that you could lose everything you risked without hedging, such as the original $100 bet and the $6,000 potential win.

Hedging and making a profit all depend on the bettor. Some sports bettors don’t mind losing the original wager and the potential profit. Still, the more calculating ones often choose to walk away with a guaranteed profit after waiting for the whole game season.

How to Calculate a Hedge Bet

It’s important to know how much you need to bet on each result to secure a profit. Thus, you should know how to do the math or keep a handy calculator.

There are various ways to compute your hedge bets manually.

Calculating a Back to Lay Hedge Bet

A back bet entails wagering on something to happen, while a lay bet means wagering on something not to happen.

For example, you've placed a $20 wager on the Seattle Seahawks at 1.55. You decided to hedge your bet with the lay odds at 1.55.

1. First, you need to calculate how much you need to lay for your hedge bet. Below is the formula you need to remember at all times:

Hedge calculation = (back price x back stake) ÷ current lay odds

where:

back price (expressed in decimal odds) = 1.55

back stake (the amount you are prepared to let the backer bet with you) = $20

current lay odds (odds you’re prepared to give to someone who wants to place a back bet) = 1.33

the amount you need to lay = $23.31

2. If your back bet wins, you can calculate your profit by using this equation:

Profit = (back stake x back odds) - (lay liability) - (back stake)

where:

back stake = $20

back odds (odds when you place a back bet) = 1.55

lay liability (the amount you are risking): (back stake x (lay odds - 1) = $7.69

lay stake (how much profit you will make) = $23.31

Profit = $3.31

3. If your lay bet wins, you can use the following formula to calculate your profit:

Profit = (lay stake - back stake)

where:

lay stake = $23.31

back stake = $20

Profit = $3.31

Calculating a Lay to Back Hedge Bet

In a matchup between the USA and Brazil, you've placed a $100 lay bet on USA with the odds at 4.9. Later on, the odds became 7.2.

Since the back odds became much higher, you may decide to hedge the market.

1. First, you need to work out how much to back for your hedge bet by using the following equation:

Back stake = (lay odds x lay stake) ÷ back odds

lay odds = 4.9

lay stake = $100

back odds = 7.2

back stake = $68.06

2. Then, you can calculate your profit if your lay bet wins with this formula:

Profit = (lay stake - back stake)

lay stake = $100

back stake = $68.06

Profit = $31.94

Hedging to Prevent a Loss

The formula for preventing a loss by hedging is simple. Once you know how much you want to make, it’s just a matter of manipulating the formula to calculate profit from decimal odds.

You divide your original stake by the hedge decimal odds and subtract one:

Hedge Stake = Original Stake ÷ (Hedge Decimal Odds – 1)

For instance, you placed a $100 bet on the Jacksonville Jaguars to win the Super Bowl at (+1000) the start of the season. The team is up against the New England Patriots, which is listed at (-200).

In this scenario, you want to guarantee that you’ll get your money back. Before you compute, you need to convert American odds to decimal odds.

Your initial stake = $100

Patriots’ odds to win against the Jaguars = 1.50

Divide the initial stake by the odds 100 ÷ (1.50-1) = $200

If you placed a $200 bet on the New England Patriots, you would get all of your money back regardless of the outcome. You are guaranteed to receive $100 when the Patriots win, covering your initial stake on the Jacksonville Jaguars.

If the Jaguars win, you will also secure a profit.

Hedging to Maximize Your Winnings

The formula for maximizing winnings is a bit more complicated than the previous one, but it will help you save time once you find yourself in a favorable hedging situation.

The formula is: X = (P + W1) ÷ O

where:

P = The profit you stand to make on your initial wager

W1 = The dollar amount of your initial wager

O = The decimal odds of the wager you’re using as a hedge

To work out how much you’re going to win, subtract X (the amount you put on the hedge) from P:

Your Guaranteed Profit = P – X

Let’s say you placed $100 on a futures bet while the odds are at +800. Meanwhile, the opposite player’s odds are at -133 (1.75). The formula is as follows:

P (profit to acquire) = 800

W1 (dollar amount) = $100

O (decimal odds) = 1.75

X = (800 + 100) ÷ (1.75)

X = 514.28

P – X (800 - 514.28 ) = 285.72

If you also placed a $514.28 bet on the other player, you’ll win $285.72 no matter what the outcome is.

Hedge Betting Calculator

If you want to know how much you need to back or lay without doing the math by yourself, you can use a hedge betting calculator.

It can help secure a profit or reduce your potential losses, whether your bet wins or loses on betting exchanges. Here’s how you can use a hedging calculator:

First, select between “Backing First” or “Laying First,” depending on your initial bet on the market. Then, enter your stake and the decimal odds of your bet.

Select the opposing odds available and enter the commission for the betting exchange you wager with. The hedging calculator will show the amount you should back or lay to secure a guaranteed market position regardless of the result.

You can partially hedge a market by using the slider, which lets you trade out only a set percentage of your initial bet.

How Bookmakers Hedge Bets

Bookmakers, also known as bookies, use the hedge betting strategy to limit their risks. Bookies lay off their liabilities, so they are in a position to make money.

For instance, the bookmakers set the teams' odds and record a win, loss, or draw. Many people can sometimes bet on a certain outcome for different reasons not related to the odds.

The team they bet on might be more popular than expected. If the particular outcome occurs, then the bookmakers are set for a large payout.

Bookies can hedge their bets by offering more favorable odds on the opposite side of the outcome. This way, they attract bets that will cover at least some of the potential losses.

Easy to Understand Hedging Examples

Here are other hypothetical situations to illustrate how you can use the hedging strategy.

Hedging for a Guaranteed Profit

The scenarios where you can use hedging for a guaranteed profit are not that common. Bettors may encounter some situations, especially if they regularly place futures or outrights.

Let’s say you’ve backed Roger Federer to win the French Open at the beginning of the tournament. You’ve placed an initial wager of $100 at 11.00 odds.

If the wager is successful, you stand to acquire a profit of $1,000. If it’s not successful, you’re going to lose $100.

Roger Federer makes it to the finals of the tennis tournament, and he’s competing against Rafael Nadal. Your $100 wager in-play leaves you in an “all or nothing situation.”

If Federer wins, you receive a profit of $1,000. If Nadal wins the finals, you lose your stake entirely.

In this scenario, there is an excellent hedging opportunity to lock in some kind of profit. You could place an additional wager on the opponent to ensure you get a return no matter who wins the tournament.

For example, Federer’s odds are at 2.30, while Nadal’s odds are at 1.50. Since Rafael Nadal is the favorite, the hedging strategy would be a sensible option unless you are convinced that Federer will win.

You need to decide how much you want to hedge. The decision should be based on your overall outlook during the hedging.

An excellent way to start is by looking at what would happen if you backed Nadal with half of the profit from Federer’s win ($500).

The total outlay would then be $600. You’ve got $100 on Federer and $500 on Nadal. Probable outcomes and potential profits include the following:

If Federer wins, you get a potential profit of $1,100 and a total profit of $500. If Nadal wins, you get a potential profit of $750 and a total profit of $250.

Based on this example, you’ve managed to secure some profit regardless of the final match result.

If you want a more balanced return, you could adjust your stake on Rafael Nadal accordingly. For instance, if you staked $700, your potential profit would be almost even.

Hedging Due To a Change in Opinion

There are times when hedging is a sensible option, especially if you’ve changed your opinion. For instance, you’re looking to place a bet on a boxing match between Beibut Shumenov and BJ Flores.

The odds for Flores is at 2.50, while the odds for Shumenov is at 1.30. Since you like Flores, you placed a $50 bet on him.

However, during the lead up to the match, you feel that Flores is not in his best shape. You’ve changed your mind about Flores’ chances of winning and decided you don’t want to be exposed to a loss.

If Flores wins, you stand to acquire a return of $75. Thus, you stake that amount on Shumenov winning.

The total amount wagered is at $125, which you’ll get back once Flores wins. You’ll receive $114.75 if Shumenov wins with a $10.25 loss.

You can’t make a return from the match, but you’ve managed to minimize your overall risk.

Tips for Hedging Your Bets

When the opportunity presents itself, hedging is something that you want to be prepared for. You need to ensure that you lock in the most profits and protect yourself from making mistakes that could be costly.

Plan Before Placing the Initial Bet

Bettors mostly end up hedging when they get close to winning a bet that they didn’t think would have a chance of winning.

Hedging usually happens when bettors make a futures bet or a bet on an underdog they thought had no chance of winning.

If you make a futures bet, you should have a plan in mind. Think of whether you want to hedge or not, and at what point you’d like to do it.

Having a hedging plan will give you a general idea of what to do and which direction to take, especially when you get close to winning.

Weigh the Risk and Reward

It is necessary always to weigh the potential risks and rewards when hedging your bets. While this is true, you should also avoid being overly cautious, as this mindset could affect your potential profits.

Finding the balance and implementing a hedging strategy that will work for you and guarantee some returns are important.

Prepare Additional Funds

In hedge betting, you need to have additional funds that you can readily wager. For instance, hedging against an underdog futures bet might require a lot of funds to pull off.

If you’re going to hedge correctly, you would need over $1,000. This amount of money is not readily available for some people, which is why you need to figure out ahead where to get the funds and include this step in your general hedging plan.

Preparing ahead of time is essential if you’re going to be hedging. Technically, you’ll be doing additional wagers and locking in profits, but you still need to be careful.

Keep these tips in mind, especially if you plan on borrowing money from a friend or another person.

Check Your Math Multiple Times

When you are ready to hedge bets, make sure that you double- and triple-check your calculation.

Now is the time to brush up on those math skills because one mistake could be costly. It might also cost you money that you’re not prepared to lose.

It’s best to run through every scenario and see to it that you’re not missing anything. Walk through the steps and the possible outcomes while calculating your potential profits and what’s at stake.

When it’s only for two teams or outcomes, the hedging strategy is not that complicated. Note that the math can get a bit confusing when you start looking at more options.

It’s easy to make a mistake when doing calculations. Take the time to ensure that you have everything correct before you start hedging.

You can ask help from a friend who’s experienced with sports betting or excels in math to double-check your numbers.

Check the Parameters of Both Bets Multiple Times

Aside from checking your computations multiple times, you need to triple-check the parameters of your bets.

Ask yourself if you are positive about what needs to happen so you can win your initial bet. You should also check and ensure that you’re making the proper hedge against your other bet.

If you are unsure about both of your bets, asking someone else, such as a close buddy or a sports betting enthusiast, to break these things down for you can help.

Find a Reliable Online Sportsbook

Online sportsbooks will help make betting easy for you. They allow you to place bets on the outcome of sporting events, like basketball, tennis, golf, and football.

Sports betting sites also offer odds on different outcomes where you can earn profit by making the correct prediction.

Hedging Is Unique for Every Situation

Whether you should hedge your bet or not is entirely up to you.

Hedging is a personal betting choice. Bettors who are gamblers often take their chances and let their bet ride.

Some bettors who are more conservative or calculating use hedging and take home guaranteed profits. Based on your desired returns, you should decide on which way to bet.

You can set parameters for yourself and use hedging only in specific circumstances, or you may choose not to hedge it all. There’s nothing wrong with hedging frequently to keep your risk exposure as low as possible, provided that you have funds to use for your hedge bets.

Do your research to make your decision accordingly and apply that knowledge to your succeeding bets. You need to ensure that you are hedging for the right reasons.

Individuals who want to start hedging should review the following: bettor’s risk tolerance, bankroll, and unique goals.