Last Updated: 2017-04-25
What is Hedging Your Bet? It is simply to reduce or eliminate the risk of your bet.
A lot of people mistakenly think that sports betting simply means betting spreads, money lines, and totals on single games. If you are only betting those options, you are doing yourself and your bankroll a major disservice. We’ve talked about some of the other betting options that are available, like live betting or in-game wagering, but there are some longer-term investments that you may want to pursue.
It can be challenging to sweat out bets on a daily basis. Sometimes, you just don’t have the ability to handicap games because a day job or a family takes your time away from betting. Fortunately, you can take different types of positions by using the futures market to your advantage. Futures can range from anything to “Who will win the Cy Young Award?” to “Which team will win the Super Bowl?”
Just like single-game bets, your bet price is already locked in and the line doesn’t change. If you play Golden State at +200 to win the NBA Title, that’s the price that you have. If by mid-January, the Warriors are +110 to win the NBA Title, that doesn’t matter to you because your play was locked in at +200. It’s just like any other type of bet. If you beat the Seattle Seahawks at -2.5 and the line closes -3.5, you still have that line. The downside to futures is that your bet could be locked up for several months over the course of a season while waiting for a result. Some people can’t afford to make those types of plays to tie of a significant chunk of financial resources. We recommend having a separate bankroll in mind for futures and then another one for your daily bets.
The true beauty in futures is the ability to hedge. The goal of every futures bet is to make money. It isn’t necessarily to pick the winner, but to put yourself in a position to turn a profit. Surely you’ve heard the phrase “hedging your bets” before. Hedging is a way to limit risk by either buying out of a position or by locking up profit.
Obviously, with player futures like MVP or NBA Scoring Champion, there aren’t really a whole lot of hedging possibilities. With picking teams to win titles or picking season win totals, you can find opportunities to guarantee a profit.
The size and type of hedge depends on your initial starting position. Let’s say that you took the Oregon Ducks at +2500 to win the NCAA Tournament in 2017. They made it all the way to the Final Four and you had one of the four teams with a chance to cut down the nets at +2500. The last thing you want to do is have a four-month investment, get to that point, and then win nothing, right? Depending on your bankroll and your risk tolerance, you could have bet four units on North Carolina at -200 to win two units. Let’s say you put $100 on Oregon at +2500 and your usual unit size is $100. North Carolina is paying back one unit for every two units wagered. So, if North Carolina wins, you would have one unit of profit to show for your future. You lost the $100 on Oregon, but won $200 on North Carolina’s money line.
With North Carolina somewhere around a five-point favorite in that game, the implied probability per the betting market that North Carolina wins is around 66.7 percent. You’re pretty confident that Oregon isn’t going to win the game. Maybe you put six units on North Carolina to win. You would make a $200 profit. If Oregon pulls the upset, your future becomes $100 to win $1900 because of what you risked on North Carolina ($600). At that point, you can look ahead to the next game to see if you want to let Oregon ride or if you want to hedge again. That decision is up to you based on what your goals are with your futures bet.
Let’s say that you played the Arizona Cardinals over 10.5 wins in the NFL. It’s Week 16 and the Cardinals are sitting at 9-5. You’re sweating bullets. The Cardinals play the Los Angeles Rams in Week 17 and there are playoff implications, so you’re pretty certain that they are going to win that game. Before the Cardinals get to that date with the Rams, they host the Seattle Seahawks. Arizona is having a good season and the Cardinals are a modest 2.5-point favorite over their archrival. They’re favored to win the game, but you’re not so sure. David Johnson is banged up and a couple of offensive linemen are questionable.
Do you let it ride? Do you see what happens and hope for the best or do you take a small position on the Seattle money line? You’ve spent 15 weeks of your time sitting on this futures bet. You can limit some of your risk by taking the Seahawks on the money line in the +120 or +125 range. Let’s say your thought process is to bet .5 units to win .6 units. You have one unit to win one unit on the Arizona win total. Do you hedge your bet for half a unit? If the Cardinals win out, you cost yourself half a unit of profit, but you didn’t come away empty-handed. If the Cardinals lose that Week 16 game, you lost 0.4 units on your futures bet, but you could have lost a full unit. Unlike the last example, let’s say that you’re a $1000 bettor. Or a $5000 bettor. Is it better to run the risk of losing some, losing it all, winning some, or winning it all? That’s up to you to decide.
While hedging is generally thought of as a play with futures, you can also do single-game hedging. As we talked about with regards to live betting, you can buy out of a pregame position or guarantee profit with in-game wagering. You can also look for middle opportunities. That’s also true of halftime wagering. One of the most common forms of hedging is to take a first-half position, a full-game position, and then look to go 3-0 or guarantee profit at 2-1 by playing something opposite in the second half. Say you bet the first half under 68 in a college basketball game and also the full game under 146. If the first half ends 33-28 and the second half total is 78, you can bet the second half over for a middle of 137 to 146 or simply guarantee a 2-1 record on that game in case the total goes over 146. That is another form of hedging.
If you’ve bet a parlay spread over a couple of days, you can hedge by playing opposite your pending bet. There are a lot of instances in which hedging can be beneficial. Understanding these concepts can really boost a bankroll and be a huge help to your bottom line.
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