What Is A Hedge Calculator?
A hedge calculator determines how much to bet on the opposite side of a bet you already placed, so the outcome is the same no matter who wins the game. Enter the original bet amount and odds. Next enter the odds on the other side. The output is the hedge amount to minimize loss or maximize profit.
Why Would You Hedge A Bet?
Odds moved in your favor and you would rather take a smaller certain profit than risk losing the bet. The three common examples:
- Futures bet where the team has reached the final.
- A parlay with one leg left.
- A line that has moved significantly since you bet.
Hedging is not free. You are paying the vig on a second bet in exchange for removing the uncertainty. Whether it is worth hedging depends on your risk tolerance, the potential payout, the probability of winning the bet, and the amount you stand to lose if the bet loses among other factors.
Hedging And Matched Betting
Hedging is the main idea behind matched betting. Every bonus bet, second chance bet, and profit boost conversion is a hedge. The difference between this hedge calculator and those is there is no promotion involved in this case.
How The Math Works
Note: The calculations below use decimal odds. If you are starting with a different odds format, first convert them to decimal odds using the Odds Converter.
Step 1. Determine the payout on a winning bet
\[
\begin{aligned}
\text{Payout} &= \text{Primary Bet Stake} \times \text{Primary Bet Decimal Odds}
\end{aligned}
\]
Step 2. Determine hedge amount
\[
\begin{aligned}
\text{Hedge Stake} &= \dfrac{\strut \text{Protect}}{\strut \text{Hedge Decimal Odds}}
\end{aligned}
\]
The hedge amount is the bet amount, placed at specific odds, that returns the same total as the bet(s) you already placed.
Example: Hedging a Futures Bet
Before the season you put $50 on a team at +1200 (decimal 13.00). They reached the final and their opponent is now -200 (decimal 1.5) at another sportsbook.
Step 1. Determine the profit on a winning bet
\[
\begin{aligned}
\text{Payout} &= \text{Original Stake} \times \text{Primary Bet Decimal Odds} \\
&= 50 \times 13.00 = \$650.00
\end{aligned}
\]
This is the total the original ticket returns if it wins, stake included. Everything else follows from it.
Step 2. Determine hedge bet amount
\[
\begin{aligned}
\text{Hedge Bet Stake} &= \dfrac{\strut \text{Payout}}{\strut \text{Hedge Bet Decimal Odds}} \\
&= \dfrac{\strut 650.00}{\strut 1.50} = \$433.33
\end{aligned}
\]
The hedge amount is the bet amount, placed at specific odds, that returns the same total as the bet(s) you already placed.
A $433.33 bet at -200 returns exactly $650.00, the same as the original ticket. That is what makes the two outcomes identical.
Step 3. Verify the profit on both sides
If the primary bet wins...
- Profit $600.00 from the primary bet
- Lose $433.33 from the hedge bet
- Net profit of $166.67
If the hedge bet wins...
- Profit $216.67 from the hedge bet
- Lose $50.00 from the primary bet
- Net profit of $166.67
\[
\begin{aligned}
\text{Return} &= \dfrac{\strut \text{Profit}}{\strut \text{Total Staked}} = \dfrac{\strut 166.67}{\strut 483.33} = 34.5\%
\end{aligned}
\]
Whoever wins, you collect $650 against $483.33 committed, so $166.67 is yours before the game starts. Unhedged, the bet is worth $600 in profit or nothing at all.
Example: Hedging The Last Leg Of A Parlay
You hold a $100 two-leg parlay at final odds of +377 (decimal 4.7727). If the first leg wins you can now hedge the parlay. Let's assume the opposing side of the final leg is available at -170 (decimal 1.5882) at another sportsbook.
Step 1. Determine the payout on a winning bet
\[
\begin{aligned}
\text{Payout} &= 100 \times 4.7727 = \$477.27
\end{aligned}
\]
Step 2. Determine hedge bet amount
\[
\text{Hedge Bet Stake} = \dfrac{\strut 477.27}{\strut 1.5882} = \$300.51
\]
Step 3. Verify the profit on both sides
If the primary bet wins...
- Profit $377.27 from the primary bet
- Lose $300.51 from the hedge bet
- Net profit of $76.76
If the hedge bet wins...
- Profit $176.76 from the hedge bet
- Lose $100.00 from the primary bet
- Net profit of $76.76
\[
\begin{aligned}
\text{Return} &= \dfrac{\strut \text{Profit}}{\strut \text{Total Staked}} = \dfrac{\strut 76.76}{\strut 400.51} = 19.2\%
\end{aligned}
\]
Hedging your bet results in a $76.76 profit compared to either $377.27 in profit or a $100 loss.
Example: Hedging to Reduce Loss
You have a $75 bet on the home team at -250 (decimal 1.40) on Sportsbook A. Due to recent injuries their odds have gotten worse and you no longer like this bet and want to hedge. The away team on Sportsbook B is +190 (decimal 2.90).
Step 1. Determine the payout on a winning bet
\[
\begin{aligned}
\text{Payout} &= 75 \times 1.40 = \$105.00
\end{aligned}
\]
Step 2. Determine hedge bet amount
\[
\text{Hedge Bet Stake} = \dfrac{\strut 105.00}{\strut 2.90} = \$36.21
\]
Step 3. Verify the outcome on both sides
If the primary bet wins...
- Profit $30 from the primary bet
- Lose $36.21 from the hedge bet
- Net loss of $6.21
If the hedge bet wins...
- Profit $68.79 from the hedge bet
- Lose $75 from the primary bet
- Net loss of $6.21
\[
\begin{aligned}
\text{Return} &= \dfrac{\strut \text{Loss}}{\strut \text{Total Staked}} = \dfrac{\strut -6.21}{\strut 111.21} = -5.58\%
\end{aligned}
\]
Instead of risking losing $75 or a chance to win $105, you are ensuring a loss of only $6.21.
Can I Hedge Only Part Of A Bet?
Yes. The DarkHorse Odds Hedge Calculator allows you to do that in two different ways.
- In settings turn on Edit Bet Amounts and enter whatever hedge amount you want.
- Use the Optimize For setting to move all the profit/risk towards or away from a specific outcome.
Should I Hedge Or Let It Ride?
The hedge calculator tells you how much you stand to win or lose if you hedge. It cannot tell you whether placing one is the right decision. Determining if you should hedge is a more complicated topic involving Positive Expected Value and even Certainty Equivalent.
A general rule of thumb is hedging is worth it when the payout on a win or risk on a loss is large relative to your bankroll.
Hedging vs Arbitrage
The math is identical, but the situations are not always the same. Arbitrage happens when there is a discrepancy between sportsbooks allowing you to profit by betting on both sides. When hedging, just like arbitrage, you cover all possible outcomes. The difference is that when hedging you are not always securing a profit like arbitrage.
