Hedging is placing a bet on the opposite outcome of an existing wager to guarantee profit or minimize potential loss. It\'s most common with futures bets when your team reaches a championship, or on the final leg of a multi-leg parlay. Hedging effectively converts a high-risk, high-reward position into a guaranteed but smaller payout. While hedging reduces variance and locks in profit, it typically reduces your overall expected value because you\'re paying vig on the hedge bet. The decision to hedge is ultimately a balance between mathematical optimization and personal risk tolerance.
Example
You bet Chiefs +2000 to win Super Bowl for $100. They make the Super Bowl vs the 49ers. You can hedge by betting $1,000 on the 49ers moneyline at +100. If the Chiefs win, you collect $2,000 from your futures bet minus the $1,000 hedge, netting $900 profit. If the 49ers win, you collect $1,000 from your hedge minus the $100 original bet, netting $900 profit. Either way you\'re guaranteed $900. Without hedging, you\'d either win $2,000 or lose $100, which has a higher expected value but much more variance.
Common Questions
Should I hedge my bets?
Should I hedge my bets?
From a pure expected value standpoint, hedging typically reduces your overall EV because you're paying additional vig on the hedge bet. However, expected value isn't the only consideration. If the potential payout is life-changing money or represents a large portion of your bankroll, hedging makes practical sense because it eliminates the risk of walking away with nothing. It's fundamentally a personal risk tolerance decision. Professional bettors with large bankrolls often skip hedging to maximize long-term EV, while recreational bettors may find more value in the guaranteed profit.
When is hedging most common?
When is hedging most common?
Hedging is most frequently used on the final leg of a large parlay, futures bets that are close to hitting, and live betting situations where you're ahead but worried about a late-game collapse. It's also common in season-long bets as a team progresses deeper into the playoffs. Before placing a hedge, always calculate the payouts for both scenarios so you know exactly how much you're guaranteeing versus how much EV you're giving up. A hedge calculator can simplify this math significantly.
What is a partial hedge?
What is a partial hedge?
A partial hedge involves betting a smaller amount on the opposite side rather than fully locking in a guaranteed profit. This approach lets you secure some guaranteed winnings while still maintaining upside if your original bet wins. For example, instead of hedging to guarantee $900 either way, you might hedge smaller to guarantee $500 on a loss but keep $1,500 in potential profit on a win. Partial hedging is a useful middle ground that balances risk reduction with EV preservation.