To Hedge or Not to Hedge
Every year around each sport’s respective postseason people struggle with a major question in sports investing: to hedge or not to hedge when it comes to their season long futures or short term series prices. Depending on who you ask, you can get very different answers about the best way to handle the situation. My goal here isn’t to tell you which is better than any other but rather provide the few schools of thought that should always be considered based on the individual bettor’s financial goals and needs.
Thought process #1: don’t hedge at all. Simply put, you took a calculated position from the start to gain an edge and you’re now sitting in a position of positive expectation. There’s no better feeling than grabbing a relative longshot during the middle of the season and then seeing your investment make it all the way to the finals. If you saw value in the investment months ago, clearly having a 20-1 shot to win just one series offers value beyond your wildest expectations. Bettors who consistently find these wagering opportunities will profit handsomely over the long haul without question.
Thought process #2: do enough to turn your long term investment into a break even proposition as the worse case scenario. These type of hedge opportunities present themselves more frequently prompting deliberate thought and calculated execution to be successful. Perfect example of this betting opportunity happened to me between Saturday and today. I’m currently sitting on a Bruins ticket to win the East at a paltry +200 from last round. Rather than scalp a portion of my risk back in Pittsburgh at -190 for the Eastern Conference finals I decided to let the bet go for Game 1. After Boston’s Game 1 win, the series price has come all the way down to a PK so I’m left with a few questions: opt out of any risk and free roll the series on Boston or take advantage of my strong position with a 1 game lead. In this type scenario I believe you have to handle almost every series the same way or you’ll always be kicking yourself no matter how it pans out. If your goal is to potentially turn a profit with no risk, the option is simple. If you’re looking to play your hand out looking for a bigger score, sit on the ticket unless something drastic happens causing you to pull a complete 180 on your initial position.
Thought process #3: always lock yourself into profit using sports futures and series prices purely for arbitrage. This mentality is probably the simplest and most straight forward of the different possible approaches. Every time you have a chance to make money without the gamble, you lock up pennies on the dollar without thinking. It’s the cold hearted sports investor manifested in its purest form utilizing a menagerie of prices in the market to grind out a few bucks whenever possible rather than trying to hit it big.
There is no right or wrong way to hedge in the sports betting marketplace. Everyone has different goals with their betting agenda and as a result should adhere to their own principles before making decisions. Hedging as a tool is extremely useful but at it’s fundamental core should only be employed as a regular strategy when the stakes are too high that a bettor needs the funds to avoid dire financial straits. The bottom line in sports betting is that scared money doesn’t make money so if you’re always looking for an “easy out” when you find yourself into a positive expectation, all you’re doing is helping the house’s edge over the long haul.
