How To Hedge A Bet
Hedging is a key strategy applied across the board by professional bettors as a means of reducing risk and securing assured winnings. Here’s how to use hedge betting in sports betting markets to secure a profit.
To hedge or not to hedge, that is the question…
For this post we will use the example of hedge betting an NBA Championship Futures Market bet.
It’s important to remember that hedge betting can of course be used in any market, and is quite popular at the end of a parlay bet, where you may bet against your last leg to guarantee a profit regardless of the last leg outcome.
Predicting a winner in an NBA futures market is not an easy task. Even when there is a clear expected winner, betting on a short odds favourite involves tying up a generous amount of your bankroll for the duration of the NBA season, at a high risk and for relatively small winnings.
Instead of identifying the outright NBA Championship winner, this post explains how to make a profit in outright markets even before the competition is over by using a hedging strategy.
*Note – If that’s all too much, skip to the bottom and use our Hedge Betting Calculator.
Hedging your bet/s to guarantee profits
The concept of hedge betting involves placing bets on a different outcome, or outcomes, subsequent to an original bet in order to create a situation where there is a guaranteed profit, irrespective of whether the original bet wins or loses.
For those who are familiar with arbitrage betting, which also involves the practice of placing two or more bets on different outcomes for guaranteed profits, there are two key differences between the two betting strategies.
What are the differences between hedge and arbitrage betting?
- The purpose of arbitrage is to spot differences between the odds offered by bookmakers and place bets on all possible outcomes accordingly. A fairly involved practice across multiple online bookmaking sites.
- Hedge betting, or hedging, on the other hand, is based on taking advantage of changes in circumstances in a market, and requires only one betting account. (Bookmakers like Pinnacle welcome this practice, whereas other bookmakers may not).
Does this seem too good to be true? Read on to discover how to make profit from hedging with our example of the NBA Championship.
Hedging in practice
Hedging a bet on the winner of the NBA Championship is a common uses of the hedge betting strategy during the NBA season. Before you jump onto your betting account however, you need to understand what it takes for the hedging strategy to work.
Here’s the example of the 2016 NBA Championship.
Remember, hedging involves placing bets on different outcomes of a single market in order to secure a profit irrespective of the outcome of the original bet.
In 2016 the Cleveland Cavaliers were a solid team, who were looked as as a decent team who could possible push their way deep into the NBA Finals, but perhaps not considered a chance to threaten at all for the title after a disappointing year in 2015, especially against the might of the Warriors.
The Cavs surprised everybody when they made the 2016 Finals against the Warriors, and luckily for those who bet on them at +650 ($7.50) to be NBA Champions before the 2016 season started, they were no in the running to take out the Championship.
Let’s say, for the sake of this example, that you had placed a bet of $100 on Cleveland to win the NBA Championship at the opening odds of +650 ($7.50). That would give you a return of $410 if they won the title. As the Cavs progressed from through the Finals and reached the final against the Warriors, the odds for Golden State to win the NBA Championship were at 1.85, providing an ideal opportunity for locking in winnings irrespective of the outcome of The Finals.
To achieve a balanced return regardless of which team wins, you have to divide the return of the initial bet by the price of the opposite outcome, i.e. 750/1.85 = 405.40 Here’s how the calculation of profit works:
The above 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 Finals, allowing you a profit of more than $244 for a risk of only $100, as well as the luxury to enjoy the NBA Final safe in the knowledge that you already have some winnings.
Adjust hedging in your advantage
To make things even more interesting, hedging also allows you to distribute the risk, and hence your winnings, based on your judgment of the final outcome.
Let’s say, for example, that you believed the Golden State Warriors would win the Championship and wanted to secure a bigger profit, if that scenario were to happen. To do this, you would have to increase the amount bet 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 1.85 ahead of the NBA Finals.
In the above scenario, you make a net profit of $255 without having increased your risk of $10. Had you bet the same amount on the opening line for the Warriors to win the Finals at 1.85, that would have given you a mere profit of $85 and a lot more stress until they secured the title.
Hedge Betting Calculator
If all this is too much for you, why not do it the easy way with our Hedge 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.
You’ll thank us when the stress has been alleviated…