To Hedge Or Not To Hedge

The following article was a “My Two Cents” commentary from this season’s TSP Newsletter. However, I thought it would be good to have it on the website given it is a topic that comes up all the time. Since February is a slower content month, I figured I would create individual articles for the website and for future reference using this football season’s “My Two Cents”. So, each Wednesday in February I will be posting an article here.

Today’s topic is hedging!

Last week I talked about parlays. Of course that discussion generated a lot of questions on hedging. Let’s have a quick and to the point discussion on how I look at hedging. I could type for hours on hedging strategy, but nobody will read it. So, here’s the Cliffs Notes version.

First, I don’t really like to hedge. When I place a parlay, sure it is nice to guarantee myself a win by hedging, but in guaranteeing myself a win I also minimize the ROI and I discount my edge in doing so. If you hedged every parlay you actually work against the edge you have built up on the wager. If you have an edge you really should just ride that edge through the good and the bad without hedging. However, there are situations where hedging is an important tool. So, I will discuss those situations next. I would say I typically hedge my exotic bets 10-15% of the time or less. In 85-90% of my exotic situations I am ride or die!

When is it a good time to hedge? I really look at only two things. First, I like to see what my performance has been for the day, week and month. If I am down big for any of these short term periods then hedging is a good idea to guarantee myself some cash back to my bankroll. It is better to lock up any profit than risk being down more units in the short term because I rolled the dice. So, as much as I want to avoid hedging, it is the best choice in certain situations. It’s why I hedged the parlay two weeks ago. It was a flat week and I could ensure a winning weekend for myself no matter the outcome. So, I took a small hedge. The short term performance of my wagering as a whole will often dictate whether I hedge or not. However, if I am having a good week, then the idea of hedging doesn’t even come into my mind. Ride or die!

The other thing I look at when hedging is whether I got a little too aggressive on my parlay or other exotic wager? When does this happen? I am a degenerate at heart and sometimes I’ll set up a rollover. I take 1 unit and I bet it straight on Team A. If Team A covers then I roll the 2 units onto a parlay. If the parlay is bringing in 15-20+ units then I like to take some of that risk off the table…but only if I feel I got too aggressive initially with my exotic wager. Another situation where this sort of thing (a little too aggressive) occurs is sometimes I put in multiple parlays and then find I am keyed to a team. I did this last weekend when I was keyed to the Colts. I had three parlays down to just Indy. So, I hedged enough to cover the cost of all three parlays and pay for another three parlays. In terms of getting aggressive, if you find yourself putting your house on a parlay only to realize you can’t handle the pressure of the last game…it’s time to hedge!

The question then becomes how much you hedge. If it’s a particularly bad week or month, I will often hedge half the value of the parlay. Thereby I am guaranteed 50% of the parlay payout. If everything with my betting for that week is otherwise going good, and I am just hedging because I am overleveraged, then I will often just hedge enough to cover the cost of the parlay X 2. So, if the parlay risk is $1 then I would hedge for $2. At which point I cover my $1 risk and have $1 profit for the next parlay.

At the end of the day, hedging is a very personal situation. It should be based not on what myself or someone else will do, but what YOU are comfortable with. If the thought of having a 1 unit parlay set to pay 10 units on Team A is too much stress…then it’s a no brainer for you…HEDGE!! If taking in all the variables that week you have decided you want to ride it out, then ride it out. There is no set mathematical formula or strategy I implement when hedging. Hedging is all about feel and situation. Yes, hedging is for gardeners, but not all the time. It can be for intelligent bettors too!

I hope the above helps you with your hedging assessment the next time we are staring down the barrel of a double digit parlay win!

Good luck in your action!