A Guide to Hedging your Bets
How to Hedge a Bet
The phrase “hedge your bets” is commonly used in the real world, usually in reference to acting cautiously or perhaps aiming to spread financial risk, e.g., by investing your savings in a range of different stocks to protect against the possibility of one or more of your investments heading in the wrong direction.
According to the Oxford English Dictionary, hedge - in relation to financial investments - is “a way of protecting oneself against financial loss or other adverse circumstances.” Betting is, of course, just another form of financial investment/speculation. As such, it is no surprise that many punters use hedging as a part of their betting strategy.
Here we take a look at exactly what it means to hedge your bets in the context of sports betting and provide a few examples of how it all works in practice
What is Hedging a Bet?
In simple terms, to hedge a bet is to place an initial bet, and then place a second bet on the opposite outcome to your original wager. But why would you want to do this? In general, punters may choose to hedge a bet for one of two reasons:
- To reduce the potential downside of your original bet
- To guarantee a profit
Hedge Betting Ante Post Example
The Ante-Post markets regularly provide a fertile ground for hedging opportunities. Say, for example, that at the start of the season, you place a £20 bet on Manchester United to win the Champions League at odds of 16/1. Nine months on, your bet is going swimmingly, with the Red Devils having made it through to the Final, where they will face big rivals Manchester City.
The prices to lift the trophy at this stage are now.
- Manchester City - 1/2
- Manchester United - 6/4
At this stage, you may wish to let your bet run, with the upside of a £320 profit and the downside of losing your £20 stake, or you may choose to hedge by placing a second bet on Manchester City. For example. Should you place a £100 bet on City to lift the trophy at this stage, you would be left with the following two possibilities:
- City Win - Total Returns £150 – Total Stakes of £120 (£100 on City + your initial £20 on Manchester United) = A Profit of £30.
- United Win - Total Returns £340 – Total Stakes of £120 = A Profit of £220.
It’s hard to turn your nose up at a win-win proposition, and many punters hedge in this way. By adjusting your hedging stake on Manchester City, it is possible to tailor the total profit for both sides as you see fit. A stake of £226.66 on City, for example, would secure a profit of £93.33 on your bets, no matter which side lifted the trophy, or you could opt to cover your original stake on United by placing a £40 bet on City – earning yourself a free shot at a £280 profit should United go on to win.
Hedge Betting: In-Play Example
Another prime opportunity to hedge can be found in the in-play markets. Let's take a tennis match between Novak Djokovic and Rafa Nadal as an example. Before the start of the match, you place a £100 bet on Djokovic to win at odds of 1/2. Novak then gets off to a flier and wins the first set, seeing the odds switch to 1/6 for Djokovic and 9/2 for Nadal. You are now in a position to hedge and guarantee a profit should you wish. For example, placing a £25 bet on Nadal at this stage would produce the following outcomes.
- Djokovic win - Total Returns £150 – Total Stakes of £125 (£100 on Djokovic + £25 on Nadal) = A Profit of £25.
- Nadal Wins - Total Returns = £137.50 – Total Stakes of £125 = A Profit of £12.50.
Hedge Betting: Acca Example
The ever-popular acca may also provide hedging opportunities. This can be difficult when all legs of the acca begin at the same time, but relatively straightforward when the last leg of the acca starts after the other legs have finished. Let’s take the following football Acca as an example.
- Brentford vs Aston Villa – Saturday 3pm - Brentford to win @ 6/4
- Crystal Palace vs Everton – Saturday 3pm - Crystal Palace to win @ EVS
- Leicester vs Wolves – Saturday 3pm - Leicester to win @ 6/4
- Newcastle vs Tottenham - Sunday 4pm - Newcastle to win @ Evs
£10 Acca returns: £250.
By 5pm on Saturday, you are in the happy position of having watched Brentford, Palace, and Leicester all do the business.
You can now decide to let the bet run or place a hedge bet on Tottenham +1 on the handicap, which covers you should Spurs win or the match end in a draw. With Newcastle priced at Even Money, the price on Tottenham +1 would be around the 4/6 mark. Placing a £100 bet on Spurs +1 would therefore leave you with the two following outcomes:
- Newcastle win - Total Returns £250 – Total Stakes of £110 (£10 Acca stake + £100 on Spurs +1) = A Profit of £140.
- Spurs win or draw - Total Returns £166.66 – Total Stakes of £110 = A Profit of £56.66.
A Useful Tool, But Not One to Use All the Time
Hedging opportunities are always worth looking out for, but perhaps shouldn’t be used indiscriminately. It is important to remember that when hedging, you are placing not one bet, but two, and therefore paying the bookmakers margin twice, which in theory will cost you money in the long run. Nevertheless, such opportunities can be hard to pass up, particularly if you can secure a big upside on both sides of the result, or if your initial stake was large and you are eager to protect it.
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