What Does It Mean to Hedge a Bet?

Imagine you have a bet that can win a large amount of money, but one final result still needs to happen.

You may place a second wager on the other side.

That second wager is called a hedge.

A hedge may help you:

• Protect part of a possible profit
• Reduce a possible loss
• Create a more predictable result

A hedge does not always produce equal profit on both sides.

You have a futures ticket that will pay $500 if Team A wins the championship.

Team A reaches the final and plays Team B.

You place a second bet on Team B.

Now:

• If Team A wins, your original ticket wins
• If Team B wins, your second wager may win

The amount wagered on Team B determines how much you make or lose in each outcome.

Hedging can reduce risk, but it can also reduce your largest possible profit.

A common mistake is guessing the hedge amount without calculating both outcomes.

Write down your profit or loss for every possible result before placing the hedge.

Check:

• Current odds
• Wager limits
• Cash-out availability
• Whether a tie or third outcome is possible
• Whether both bets can be voided differently

1. 1. What is the main purpose of a hedge?

   • A.Reduce or manage risk
   • B.Guarantee a team scores
   • C.Cancel all sportsbook rules

2. 2. Can hedging reduce your largest possible profit?

   • A.Yes
   • B.No

3. 3. Should you calculate every outcome first?

   • A.Yes
   • B.No