Hedging And Middling

Hedging means betting the other side of a position you already hold to reduce variance. Middling means holding two bets on opposite sides at different numbers, so a result between them wins both. One trades expectation for certainty; the other is free money when it appears.

Hedging: What It Costs

A full hedge always reduces expected value, because you pay vig on both bets. If the original bet was positive expectation, hedging it gives some of that back; if it was negative, hedging locks in a smaller loss.

Which makes hedging a risk-management decision rather than a value decision. The right question is not "will this make me more money" — it will not — but "is the variance on this position larger than I should be carrying".

The last row matters. Betting the other side because the game is going badly is not hedging, it is capitulation at a worse price. See chasing losses and tilt.

Working A Hedge Out

Suppose you hold a futures ticket returning 1,000 profit if a team wins the championship, and it has reached the final. The opponent is available at +150.

To guarantee an equal result either way, stake x on the opponent such that 1.5x − 100 (your original stake, already spent) equals 1,000 − x. Solving gives x = 440, producing roughly 560 either way instead of 1,000 or nothing.

You have converted a 40%-of-the-time 1,000 into a certain 560. If your team's true chance is above 44%, that is a loss of expectation — and it may still be the right decision if 1,000 versus nothing represents an unacceptable swing relative to your bankroll.

Partial hedges are usually the sensible middle: hedge enough that the downside is tolerable, leave enough that the upside still matters. See futures betting.

Middling: The Good Version

A middle exists when you hold both sides at different numbers, with a gap in which both win.

Example. You bet a team +7 early. The line moves to +3, and you bet the other side -3. If the favourite wins by 4, 5 or 6, both bets win. If it wins by more than 7 or fewer than 3, one wins and one loses, and you pay only the vig.

The cost of a middle attempt is small — typically the vig on one bet, around 4.5% of a unit — and the payoff is two full wins. Middles in football that span 4, 5 and 6 hit roughly 12 to 15% of the time, comfortably enough to be profitable against that cost.

Practical Notes On Both

Middles are best across key numbers. A football middle spanning 4 through 6 misses 3 and 7 entirely, which is where margins cluster. A middle spanning 3 to 7 is far more valuable. See key numbers.

Scalping is different and usually not worth it. Betting both sides at slightly different prices for a guaranteed tiny profit ties up capital for a fraction of a percent and burns limits.

Watch for correlated same-book exposure. Some books restrict betting both sides of a market.

Track middles as two bets. Recording them as one obscures both the individual results and the CLV. See record keeping.

Frequently Asked Questions