I have a 5.5u to win 14.6u ticket on LSU to win the BCS that I bought the night before the teams were announced. I thought my edge was significant on the bet, so I bought as much as I could find at good odds and planned to hedge later. I have no opinion on the game given current prices.

Given this, what's my optimal hedging play? I have no problem with variance, but I'd like to make the correct mathematical decision to optimize bankroll growth. For bet sizing I use Kelly all the time, but I'm not sure how to use it for hedging. My purpose is to learn more than just solving this particular problem. I'm also fine if the answer is not to hedge, but I'd like more than a "hedging is for porkchops" type answer.

Thanks!

edit: 1u = standard 1% of BR

Assuming you think all lines are fair for the game, The optimal play is to bet x units on y.

y = Ohio State ML / 100

x = 20.1 / y + 1

At 150 Ohio ML, you lock in 6.5 units

Hmm... is it really as simple as that? I guess it could be with my "no opinion on the game" statement. What if I thought OSU was a 54% bet at +150?

"What if I thought OSU was a 54% bet at +150?"

I would tell you to give the market a *little* bit of respect...

You'd be an idiot.

Calculate the Kelly output based on 54% and 150 and simply add it to X.

At a 150 ML, x = 8. If Kelly outputs 1u based on those lines, then bet 9.

Kelly maximizes expected bankroll growth. See:

http://forum.sbrforum.com/players-ta...n-part-ii.html

HEre is your expected bankroll growth assuming a bet of x percent of your roll on the OSU moneyline at +150.

E(G)=(1-x+.146)^p*(1-.055+1.5*x)^(1-p)-1

where p is the percent chance that LSU wins. Using the pinny vigfree line LSU wins 60.74% of the time. Plug that in and maximize the above function. I get x=.0672 so putting a 6.72 unit bet on the OSU moneyline maximizes your expected growth.

If you really thought OSU won 54% of the time and given your existing bet on LSU you maximize your expected growth with a 32.9 unit play on the OSU moneyline.

It's a hypothetical... believe me I wouldn't have made the bet in he first place if I didn't think LSU would be favored.

Heh. Fair enough.

LOL... I also totally phrased this wrong, which I'm just now getting (a bit slow today). I was thinking of the equivalent of a 54% on a side, but realized that I said OSU ML. I should've said OSU +150 was a 42% bet or something. No wonder everyone's giving me crap.

Concept still applies though, bet back to "even" on the LSU bet and make a standard Kelly bet on OSU from there? That seems to be what centris and yowzers are saying. Is that right?

Assuming LSU has a 60% chance of winning the game, you lose 2.5u of EV by hedging.

Why would I lose any EV betting OSU at +150 if OSU is 40% to win?

You are not looking to maximize expected value, you are looking to maximize expected growth (if you use Kelly betting). To maximize expected growth if you think OSU wins at 40%, can get +150 and have your original bet you should bet 8.03 units on OSU.

Read these to understand the difference between expected value and expected growth:

http://forum.sbrforum.com/players-ta...tml#post250260

http://forum.sbrforum.com/players-ta...n-part-ii.html

The odds on your original bet are that much better.

14.6u * 60% chance of winning = 8.75u

If you hedge perfectly you only make 6.5u.

Thanks all... I think I get it now.

So what are you going to do?

in this type of situation I almost always hedge enough to give myself a freeroll (here I guess 3.5 or so units on OSU moneyline). I just dont see much value in using calculus models for any aspect of sports betting when they are admittedly useless without the most sujective determination of all, ie, the perceived "edge" in a sports wager.

TooTall, due to WVU losing as a 4 TD home favorite to Pitt on the final day of the season (not to mention LSU beating Tenn and Oklahoma beating Missouri), I am still holding futures which amount to wagering $3,607 on Ohio State to win $4,893. That's like having bet $3,607 on Ohio State at +136 on the ML (not a good situation but could have been even worse).

Anyway, the line on this game has come down to where I believe it is EV neutral (which is a big surprise to me). I would like to hedge some of my risk (lock in a loss if you will).

We could hedge through each other if you want. We can settle on a fair ML (probably in the +/- 157 range). We can post up the money (escrow).

Let me know if you are interested.

Is this tlt's inarticulate twin?

Good one. Very funny.

Seriously, that's all your abortion of a post deserved.

Fella, you really need to loosen up a bit. Its just a post, and if you dont like it, then fine. Instead you choose to be a major ******* for some reason.

Pussies always hedge. Arc you are a pussy.

That is all carry on fellas.

If you don't want to contribute anything worthwhile, don't post in the first place. You're no better than the tards who come into any thread about teasers and talk about doing 6 point teasers from -5.5 to +0.5 so that the favorite just has to win the game.