What is hedging a bet?
Hedging is placing a second bet on the opposite outcome of a bet you already hold, in order to reduce your possible loss or secure a profit whatever the final result.
You hold a bet that’s turned out well, and one result stands between you and a nice payout. Hedging is buying insurance on that result. You give up some of the upside so the downside stops hurting.
The term is the same in the UK and the US. British bettors on an exchange also call it “trading out” or “greening up”.
Example
Before the tournament you put $20 on a team to win it at 11.00. If they do, you get $220 back. They’ve reached the final, and their opponent is priced at 2.20.
To get the same return either way, divide your potential payout by the opponent’s odds:
- Hedge stake = $220 ÷ 2.20 = $100 on the opponent
| Final winner | Returned | Total staked | Profit |
|---|---|---|---|
| Your team | $220 | $120 | +$100 |
| The opponent | $220 | $120 | +$100 |
Without the hedge it’s +$200 or −$20. With it, +$100 whatever happens. You can also hedge halfway: stake $50 on the opponent and you finish on +$150 or +$40.
Watch out
- It isn’t free. The hedge bet carries the bookie’s margin, so on average hedging lowers your long-run return. You’re paying for peace of mind.
- Size matters. If $200 wouldn’t change your month, the maths says let it ride. If it would, hedge and sleep well. Both are fine choices.
- Cash out is a hedge the bookie does for you, usually at a worse price than doing it yourself.
- Don’t hedge bets just because you’re nervous. If you hedge everything, you’re simply paying two margins on every opinion.
On an exchange you can hedge by placing a lay bet against your own selection.