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[Pro Football] Topic: To hedge or not to hedge, here is the math and why hedging is a bad idea.... |
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vanzack |
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#1 Posted: 9/11/2007 10:27:48 AM
Yesterday there was a thread about hedging a parlay, as there is at least 5 times a week every week. I am constantly amazed at just how many people assume that hedging is a good practice. At least 90% of the people here – when asked – give the advice to hedge the last game of a parlay.
For those interested, here is the math, and the reason that it is dumb to hedge.
The first situation is what the poster yesterday did, as he parlayed teams on 2 different days. His first 3 teams were on Sunday, and his 4th team was on Monday. This is a big no no. He would be much better off betting a 3 team parlay on Sunday, and then rolling all of the proceeds in to a straight bet on Monday:
Option 1: Bet a 4 team parlay at 10-1. Bet 100, win 1,000.
Option 2: Bet a 3 team parlay at 6-1, bet all proceeds straight up on Monday team. Bet 100, win 1,336.
Option 2 makes you MUCH more money (1,336 vs 1,000) on your 100 dollar bet. This is a no brainer.
The second situation is the one always talked about here and is the one that is most misunderstood. If you have already put a team in a parlay, and nothing has fundamentally changed with the line or game situation, you have to pay a tax to hedge (vig). So if you know you are going to hedge, don’t bet the last team in that parlay to begin with. Here is the math:
Option 1: Bet a 4 team parlay and hedge the last game.
You bet 100 to win 1,000 on a 4 team parlay, the first 3 win, and you decide to hedge the last game. The last game is Miami vs Philly and the line is the same as when you bet it, Philly is -3. You have Miami +3 on your parlay, so you hedge by betting 576 to win 524 on Philly at -3, afterall – you are guaranteeing yourself money right? So now if Philly wins you win 424, and if Miami wins you win 424. So you win 424 either way, you have hedged, and you think you did the smart thing.
Option 2: Bet a 4 team parlay and don’t hedge the last game, and ride it out.
You bet 100 to win 1,000 on a 4 team parlay, win the first 3 games, and let it ride out. If the last game has a 50/50 expectation, you will win it half the time and lose it half the time. So your expected value on letting it ride is 500.
Option 3: Realizing you are going to hedge the last game of your 4 team parlay, you just bet a 3 team parlay instead.
You bet 100 to win 600 on a 3 team parlay because you know you like to hedge. You win your first 3 games and win 600. |
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vanzack |
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#2 Posted: 9/11/2007 10:27:58 AM
So in summary here are the expected values in this situation:
1. Hedging 424
2. Don’t hedge 500
3. Leave the last game off of the parlay 600
Hedging is clearly the worst alternative unless something has fundamentally changed such as the line, injuries, weather, or your financial situation has created utility that you cant pass up. But if you are saying to yourself before you bet the parlay that you are going to hedge the last game – JUST LEAVE THAT GAME OFF OF THE PARLAY IN THE FIRST PLACE. And if you find yourself in the situation of last nights poster, where you have won the first games and are down to one game and are considering hedging, UNDERSTAND THAT HEDGING COMES AT A PRICE, YOU WILL PAY EXTRA IN ORDER TO HEDGE.
GL
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DevilFan |
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#3 Posted: 9/11/2007 10:37:30 AM Hey Van-- I didnt read your entire post but I hedged yesterday and it worked out well.
I had a $400 teaser of Dallas (even) and 49ers (+3.5).
When the line went to S.F. -3.5 yesterday, I bet $400 on Arizona +3.5. Obviously I was hoping either team would win by 3 or less and if so, I would hit both sides and win $800. If either team won by more than 3, then I would have lost either $40 or $80, depending which team won.
It worked out for me obviously and I won the $800.
As far as hedging parlays, if I only have one game left open on a parlay and I can guarantee myself $ by betting the other side of the last game, I will usually do it. These are more profitable when betting money lines as opposed to a spread especially if you are hedging out by betting the ML dog.
I don't necessarily agree with you that hedging is not smart. Anytime you can guarantee yourself $, you should consider taking it. Alot of time I will put together a bullshit parlay with a late game in there just case I hit the early ones, I can hedge out and guarante $. |
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vanzack |
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#4 Posted: 9/11/2007 10:41:23 AM QUOTE Originally Posted by DevilFan:
Hey Van-- I didnt read your entire post but I hedged yesterday and it worked out well.
I had a $400 teaser of Dallas (even) and 49ers (+3.5).
When the line went to S.F. -3.5 yesterday, I bet $400 on Arizona +3.5. Obviously I was hoping either team would win by 3 or less and if so, I would hit both sides and win $800. If either team won by more than 3, then I would have lost either $40 or $80, depending which team won.
It worked out for me obviously and I won the $800.
As far as hedging parlays, if I only have one game left open on a parlay and I can guarantee myself $ by betting the other side of the last game, I will usually do it. These are more profitable when betting money lines as opposed to a spread especially if you are hedging out by betting the ML dog.
I don't necessarily agree with you that hedging is not smart. Anytime you can guarantee yourself $, you should consider taking it. Alot of time I will put together a bullshit parlay with a late game in there just case I hit the early ones, I can hedge out and guarante $.
You dont read my post but you dont agree with what I am saying?
How do you know what I am saying?
Unreal. |
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vanzack |
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#5 Posted: 9/11/2007 10:42:59 AM QUOTE Originally Posted by DevilFan:
Alot of time I will put together a bullshit parlay with a late game in there just case I hit the early ones, I can hedge out and guarante $.
I give up. If you read my post above, it explains why this is a terrible idea. But you wont read, so you wont ever understand. |
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vanzack |
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#6 Posted: 9/11/2007 10:46:42 AM QUOTE Originally Posted by DevilFan:
Alot of time I will put together a bullshit parlay with a late game in there just case I hit the early ones, I can hedge out and guarante $.
All I can do is laugh. I explain above why everything about this is a bad idea. How putting a parlay together with a late game is bad, and how putting a game in a parlay that you know ahead of time you will hedge is bad, but you just come right back and repeat to me what I already know:
MOST GAMBLERS WILL DO NOTHING TO HELP THEMSELVES MAKE MORE MONEY.
Its math. It is not debatable. But you would rather give money to your book as a gift instead of keep it for yourself. Oh well. |
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DevilFan |
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#7 Posted: 9/11/2007 10:52:23 AM This is why we live in America buddy, or at least, I do. I don't need to agree with you or your reasoning. I read your post and I don't agree with it.
You're telling me it is stupid to guarantee yourself $?
If you are, then all I can do is .
fyi.. I said I didnt read your entire post. I read enough of it. I'm an attorney, I'm trained to spot the issue without having to read all the other crap surrounding it.... |
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DevilFan |
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#8 Posted: 9/11/2007 10:54:38 AM UNDERSTAND THAT HEDGING COMES AT A PRICE, YOU WILL PAY EXTRA IN ORDER TO HEDGE.
Thanks Dr. Obvious. This is gambling, there is and always will be a price... |
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DevilFan |
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#9 Posted: 9/11/2007 10:59:26 AM What I am missing is your thinking that Hedging, WHEN YOU CAN GUARANTEE YOURSELF $, is foolish. Tell me how foolish it is next time you don't hedge and you end up losing the last game. Come to me then and tell me how that worked out for you. Come tell me that it wasnt foolish not to hedge and guarantee yourself $ because you had to pay 10% vig.
And, when I say guarantee yourself $, I am not talking about a few dollars. What I did last night was hedge a teaser, a lot different than hedging parlay because I couldn't guarantee myself $ last night but the risk vs. reward last night was worth it. I basically had 6 numbers to middle both bets where the payout was 10-1. I will take that every day of the week and twice on sunday my friend.
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vanzack |
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#10 Posted: 9/11/2007 11:00:03 AM QUOTE Originally Posted by DevilFan:
This is why we live in America buddy, or at least, I do. I don't need to agree with you or your reasoning. I read your post and I don't agree with it.
You're telling me it is stupid to guarantee yourself $?
If you are, then all I can do is .
fyi.. I said I didnt read your entire post. I read enough of it. I'm an attorney, I'm trained to spot the issue without having to read all the other crap surrounding it....
So you are saying that you choose to win less money, just for the hell of it.
You dont want to win more money by doing the same exact thing, you would rather GIVE money away by doing something else that gives you the same exact risk.
OK mr Attorney. Looks like you correctly spotted the important parts of my post.
Listen to yourself. You are actually saying that given a choice between making more money or making less money on the same exact situation, you would take less, and not only take less but argue that it is somehow smart!
Wow. Your fellow attorneys must be so proud to have you as a peer. |
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#11 Posted: 9/11/2007 11:01:25 AM
if i can lock in a profit and minimize my risk i will do it. i dont really consider myself a gambler anyway...more of an investor of sorts
although i hate minimizing my profit, i do like guaranteed profit and little risk
this is very rare for me as i dont do parlays and teasers much if at all
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vanzack |
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#12 Posted: 9/11/2007 11:02:05 AM QUOTE Originally Posted by DevilFan:
What I am missing is your thinking that Hedging, WHEN YOU CAN GUARANTEE YOURSELF $, is foolish. Tell me how foolish it is next time you don't hedge and you end up losing the last game. Come to me then and tell me how that worked out for you. Come tell me that it wasnt foolish not to hedge and guarantee yourself $ because you had to pay 10% vig.
And, when I say guarantee yourself $, I am not talking about a few dollars. What I did last night was hedge a teaser, a lot different than hedging parlay because I couldn't guarantee myself $ last night but the risk vs. reward last night was worth it. I basically had 6 numbers to middle both bets where the payout was 10-1. I will take that every day of the week and twice on sunday my friend.
This, along with your foolishness of not reading my original post in its entirety and actually thinking - is why you will never be a winning gambler - or never win as much as you should.
Its your choice, and you are choosing to GIVE money away.
GL with that. |
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vanzack |
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#13 Posted: 9/11/2007 11:04:06 AM QUOTE Originally Posted by KOAJ: van if i can lock in a profit and minimize my risk i will do it. i dont really consider myself a gambler anyway...more of an investor of sorts although i hate minimizing my profit, i do like guaranteed profit and little risk this is very rare for me as i dont do parlays and teasers much if at all
Holy shit KOAJ did you read my original post?
I am absolutely stunned by the opposition. Please read my post again.
Hedging is a psychological mindfuck. I give alternatives in my original post to doing the same exact thing as hedging, by not hedging, and making more money.
Somebody help me here please.
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vanzack |
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#14 Posted: 9/11/2007 11:08:11 AM OK, let me ask this question.
If you know you are going to hedge the last game of a parlay, why not bet 2 parlays, one with team A of the last game and one with team B of the last game?
This hedges before the parlay even starts.
The answer is that it is the same as leaving the game off of the parlay, but YOU MAKE MORE MONEY BY LEAVING IT OFF IN THE FIRST PLACE. |
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#15 Posted: 9/11/2007 11:09:30 AM mathwise u are correct brother van but for some its about gar a buck , and i did read your original post , good stuff as usual  |
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#16 Posted: 9/11/2007 11:10:40 AM |
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#17 Posted: 9/11/2007 11:12:03 AM QUOTE Originally Posted by DevilFan:
Because einstein, if one of the other teams lose in your parlay, then you lose both parlays... you're not serious with that questions, are you? pleasee don't tell me you are.
You bet half as much on each einstein, please tell me you understood that.
Its the same as hedging, and please tell me you understand that. |
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#18 Posted: 9/11/2007 11:12:15 AM And, Mr. Money, it's not about winning less, it's about guaranteeing yourself $ versus not hedging and losing the last game. If that happens, you now LOST money as opposed to winning anything at all.
It's really a pretty simple concept if you think about it. Stop being Dr. Phil and trying to over analyze it. |
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#19 Posted: 9/11/2007 11:13:16 AM QUOTE Originally Posted by angelobruno:
mathwise u are correct brother van but for some its about gar a buck , and i did read your original post , good stuff as usual
Angelo - but it is very easy to guarantee yourself MORE bucks.
Its not one or the other. It is betting it a different way to make yourself MORE MONEY on the same wager.
Im not sure what the confusion is here. |
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DevilFan |
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#20 Posted: 9/11/2007 11:13:49 AM Well I guess KOAJ and myself are both morons for wanting a guaranteed profit. |
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#21 Posted: 9/11/2007 11:16:38 AM QUOTE Originally Posted by DevilFan:
And, Mr. Money, it's not about winning less, it's about guaranteeing yourself $ versus not hedging and losing the last game. If that happens, you now LOST money as opposed to winning anything at all.
It's really a pretty simple concept if you think about it. Stop being Dr. Phil and trying to over analyze it.
Let me try to say this in a way that even you might understand:
I give you an option to bet the the Colts vs the Cardinals. The colts are favored by 3. You have one of the following 2 options:
1. Bet the colts -3 -110
2. Bet the blue team -3 vs the red team at +150.
They are the same bet, but you are presented with a way to bet it and make more money. THIS IS WHAT I AM SAYING WITH HEDGING!!!
You can make more money every single time by just betting it differently. Do you get it now? |
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#22 Posted: 9/11/2007 11:17:10 AM
Its your choice, and you are choosing to GIVE money away.
Right, by guaranteeing myself $ versus doing nothing at all and losing $ after the last game loses. There are no guarantees in gambling and no matter how much you love a side or total, it can lose for any of a number of reasons. For that very reason, a smart gambler will guarantee himself $ every chance he gets. And for that reason, I am a smart gambler.
I bet thousands of dollars every day of my life on sports, this is not a one day go for the big hit kind of score. Every day that I win $, is a good day. |
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#23 Posted: 9/11/2007 11:17:58 AM QUOTE Originally Posted by DevilFan:
Well I guess KOAJ and myself are both morons for wanting a guaranteed profit.
You are a moron for not maximizing the amount of money you will make for guaranteeing profit.
You can make a profit of X, or you can make a profit of >X, and you are choosing X.
So yes, you are a moron. |
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#24 Posted: 9/11/2007 11:19:35 AM van
you make great points, but you cant be closed minded to the fact that for some people the way to go is a guarantee a smaller profit today and move onto tommorrow ....nothing more or nothing less... to each his own..... theirs nothing to figure out if you could possitively make money and move on or take a chance at making alot of money and then make none..
i would assume you dont golf their is a little thing called risk and reward...
same as in sports investing, the investor hedges, the gambler does not ....imho |
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#25 Posted: 9/11/2007 11:19:55 AM QUOTE Originally Posted by vanzack:
Holy shit KOAJ did you read my original post?
I am absolutely stunned by the opposition. Please read my post again.
Hedging is a psychological mindfuck. I give alternatives in my original post to doing the same exact thing as hedging, by not hedging, and making more money.
Somebody help me here please.
1. Hedging 424 - guaranteed every time
2. Don’t hedge 500 - hit or miss, 50/50 chance everytime
3. Leave the last game off of the parlay 600 - only comes about if you hit the first three games leading you back to choosing between 1 and 2
i think my point was more about guaranteed vs non guaranteed profits if you have hit all but 1 leg of the parlay
if you have 4 such parlays and you hedge evertytime using your numbers
1 - 424 * 4 = 1696 profit
2 - 500 * 2(ev) = 1000 profit
thats IF you can consitently expect to hit the last leg 50% of the time. i dont think anything is guaranteed
in the grand scheme yes hedging is the worst option but to me it comes down to guaranteed money vs risk. i will choose guaranteed money almost every time
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