Hedging
Placing a bet on the opposite side of an existing wager to reduce risk or lock in profit.
Hedging is the act of placing an additional bet on the opposite side of an existing wager to reduce exposure or guarantee some profit. Bettors commonly hedge futures bets or parlays when they're in a favorable position.
When to Hedge
The most common hedging situation: you bet a team to win a championship at +1000 at the start of the season, and they make the finals. You can now bet their opponent to guarantee profit regardless of who wins.
The Math
Hedging always reduces maximum profit but eliminates or reduces the risk of losing your original bet. Whether to hedge depends on your risk tolerance and the expected value of leaving the bet open.
Key Takeaways
- Hedging reduces maximum profit but guarantees some return.
- Most commonly used with futures bets and late-round parlays.
- Hedging is not always mathematically optimal. Weigh EV against your risk tolerance.
- A complete hedge guarantees profit; a partial hedge reduces risk.
Examples
- You bet $100 on the Chiefs at +600 to win the Super Bowl. They make it. Betting about $396 on their opponent at -130 locks in roughly $204 profit whoever wins.
Related Terms
Test Your Knowledge
1 / 4Do you know what Arbitrage (Arbing) means?
Placing bets on all outcomes of an event across multiple sportsbooks to guarantee a profit.
Frequently Asked Questions
Should I always hedge a big futures bet?
No. Hedging costs you expected value because you pay juice on the second bet. It makes sense when a guaranteed amount would matter a lot to you, not as an automatic move.
How do I calculate a hedge?
Size the second bet so both outcomes return the same amount. With $100 on a +600 future, your payout is $700. Betting about $396 on the opponent at -130 also returns about $700, locking in roughly $204 profit whoever wins.