You have probably heard the term 'hedge your bets,' which, under one definition, means to make smaller bets on different outcomes in case your large bet does not work out. Hedging in the stock.
- What Does Hedge Your Bets Mean Examples
- What Does Hedge Your Bets Mean Meaning
- What Does The Phrase Hedge Your Bets Mean
- Hedge Bet Definition
Hedging your bets is a strategy that a lot of professional and recreational bettors employ, but, what does it mean?
To put it simply, hedging your bets is when you place multiple bets on the same market to guarantee a profit on all outcomes, or to reduce losses.
A lot of people will call this ‘greening up’ which comes from the betting exchange at Betfair where results that were positive on all outcomes would turn green. There are many ways in which a single bet can be hedged, of which we will go through in this article.
Hedge Your Bets Meaning Definition: Choose or support more than one option at a time in an effort to reduce the chance of losing. Origin of Hedge Your Bets The word hedge means to avoid making a definitive commitment. Hedge betting is a gambling strategy that is also used in the finance world, where the potential losses of investments are mitigated by other outlays. Hence the term “hedge fund”. Of course, while losses can be reduced, it means any gains are also reduced, due to the outlay on the other parts of the hedge.
An Example of Hedging a Bet
Let’s say that before the start for the US Open (tennis) you backed Roger Federer to win at odds of 10.00.
Bet 1: £100 on Roger Federer to win the US Open at 10.00
As the tournament wears on Federer has made it to the final and now plays off against Andy Murray. The odds of Federer to win that match (and effectively win the title) are:
- Federer: 1.90
- Murray: 2.80
If you left your original bet to run and Federer went on to win the match and the championship, then your original bet would win. But, now he has got to this potion it is going to be possible to hedge your bets to look in a profit even if Federer goes on to lose the match. Here’s how…
Lets say that your original bet was £100 on Federer to win, returning £1,000 in total. The only other outcome that can occur at this point is if Murray wins. So, we bet £300 to Murray to win at odds of 2.80 returning £840 as a result.
Bet 2: £300 on Andy Murray to beat Roger Federer at 2.80
At this point we have a total liability of £400 (£100 on Federer at the start and £300 on Murray at the final). If Federer goes on to win then we would get a return of £1,000 minus the £300 placed on Murray, resulting in £700 total. If Murray wins, then we win £840 minus the original £100 stake on Federer, resulting in £740 total.
| Bet Number | Player | Odds | Return | Potential Profit |
|---|---|---|---|---|
| Bet 1 | Roger Federer | 10.00 | £1000 | £700 (£1000 – £300) |
| Bet 2 | Andy Murray | 2.80 | £840 | £740 (£840 – £100) |
So, either way, we have a positive result and this is essentially what is called, hedging your bet.
Laying Your Bets
By using a betting exchange such as Betfair, you will be able to not only back a bet, but also lay a bet. A lay bet is where you back against a certain outcome, where a back bet is where you bet in favour for a certain outcome.
As the odds of you’re your initial back bet decrease, it means that you are now going to be able to lay the bet (bet against) the same bet to guarantee a profit. The lay would mean that you have backed both for and against for a certain amount, but at different odds, meaning that whatever the outcome of the match, you will still be making a profit.
Cashing Out
Cash out works in much the same way and it allows you to settle your bets before that market has completed. How it works is that the bookmaker will split your initial stake to cover all possible results from that market in a way that guarantees you the same return for each bet.
For example, if you back Arsenal to win at odds of 2.00 with a £100 stake, a successful bet would return £200 in total. But, let’s say that Arsenal are 2-0 up with 20 minutes to play, the bookmaker may offer £150 to take the guaranteed profit early and lock your returns in. This works by them taking your original stake and spreading it across and Arsenal win, an Arsenal lost and the draw, giving you same return for each bet.
What Does Hedge Your Bets Mean Examples
Minimising Your Losses
We’ve spoken at length at about locking a profit when hedging your bet, but you can use the same process to minimise losses. For example, using the same Arsenal example above, if they are losing 1-0 with 20 minutes to go, the price of your cash out or lay bet may be less that of your original stake. You decided that you want to cut your losses as they hold little chance of winning the game from here, so cash out for less than your original stake, but at least some returns, which are better than none.
Hedging your bet on the last leg of a parlay is usually chickening out, not being smart.(Photo credit: CarbonNYC [in SF!] / iWoman / CC BY)
A popular sports betting strategy is to hedge your bets in order to guarantee a profit.
While it’s true that hedging your bets can be a smart sports betting strategy, it can also cost you money when not done properly.
What does hedge your bets mean?
To hedge your bets basically means reducing or eliminating your risk on a wager, typically by betting the opposite of your original bet.
What Does Hedge Your Bets Mean Meaning
Let’s say the Raptors are playing the Bulls and you bet on Toronto -2.5. The Raptors get off to a fast start, taking an early 10-point lead, and you see Chicago as +5.5 on the NBA live betting lines. You take Chicago +5.5, meaning you no longer are at risk of losing your entire wager if Toronto does not win by 3 or more. If the Bulls lose by 3-5 points, you can even middle your bets and win both without much risk.
Don’t cost yourself a winner
The problem with choosing to hedge your bets in this case is that you might be costing yourself money.
When you bet on Toronto to win by 3 or more, you obviously expected the Raptors to play well. To hedge your bets after the Raptors get out to a big early lead is basically contradicting your own opinion from before the game started, and doing so after your original bet has a better chance of winning than before the game started. If Toronto ends up beating the Bulls by more than 5 points, you would have cost yourself a winning bet by hedging.
The same is true with parlay betting. For example, let’s say you bet a 4-game NFL parlay and won your first 3 games. If you hedge your bets on the fourth game, you guarantee yourself a profit on the parlay, regardless of the result of the fourth game. But if you don’t think the fourth game on your parlay will win, why did you bet it in the first place?
So when does it make sense to hedge your bets?
There are two main situations where choosing to hedge your bets makes sense.
The first is when you feel the likelihood of winning a wager has decreased since you made the bet. This can happen when there is an injury that you didn’t know about, or you discover a handicapping angle you hadn’t considered before you made your bet. If you have the Raptors -3 -110 and then change your mind, you can bet on the Bulls +3 -110 and swallow the small loss on the juice.
The second is when you make an original bet with the intent of hedging. A good example of this is in playoff series betting. If you bet on the underdog in the series at +300 and then they win the first game, you now have an opportunity to bet on the favourite to win the series at lesser odds (maybe -150 or so). This allows you to cash in on your underdog bet, regardless of whether they win the series or not.
What Does The Phrase Hedge Your Bets Mean
Only hedge your bets with good reason
Hedge Bet Definition
Basically, the rule of thumb for hedging your bets is to have a good reason for doing it. If you think the hedge bets have a better chance of winning than the odds suggest, it’s a smart move to hedge your bets. But if you’re simply scared about losing your original bet, you’re just burning money to bet against yourself with a hedge.