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Old 11-14-2017, 03:12 AM   #1
PokerHero77
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Hedging FAQ

Many on this forum have asked "should I hedge" when confronted with a potentially large payout with one or a few legs to go on a parlay (accumulator) ticket.

In this thread I will pose hypothetical hedging questions which I will answer in the context of expected growth. So, each question will rely on the player's bankroll, and some idea of the edge(s) the player may have for the wagers in question. Generally speaking, I believe expected growth is a fair way to compare different betting approaches.

Also, each question will be answered "in a vacuum", that is with no consideration to other open bets the player may have.

QUESTION 1: I played a 10 team parlay ticket with 6 games played Sunday morning, 2 games played Sunday afternoon, 1 game played Sunday night, and the final game played Monday. I wagered $4 on my $5,000 bankroll, with odds of 799 to 1 if all 10 selections win. I estimate my win rate per leg at 54%, due to the odds printed several days prior to purchasing the ticket. I expect to take the opposite side of any of the non-morning games at -105, with a 4% chance of winning both the opposite side and the parlay side. When should I hedge assuming (a) I win the first 6 games, (b) first 8 games, (c) first 9 games?

ANSWER: With no hedge wagers, your expected growth on this ticket is a paltry 0.024%. The optimal bet size is $4.30 resulting in a fractionally higher EG. The proper hedge wagers should be the following:
(a) $70 on either of the 2 Sunday afternoon games;
(b) $650 on the Sunday night game;
(c) $1,400 on the Monday night game.

Doing so will result in an expected growth of 0.037%, almost double what you get without hedging.

If you had known you should be hedging, then your parlay wager should be $12, and your hedge wagers should be the following:
(a) $375 on either of the 2 Sunday afternoon games;
(b) $2,100 on the Sunday night game;
(c) $4,500 on the Monday night game.

With the above bet sizing your expected growth increases to 0.066%.

In the ideal case you would hedge each leg after the first 6 wins, which you cannot do here because there are 2 games played simultaneously Sunday afternoon. This results in an expected growth of 0.095%, about 4x the original non-hedged wager.
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Old 11-14-2017, 11:35 AM   #2
Iowa!
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Re: Hedging FAQ

Not starting with the most basic/common example (one leg to go on a future/parlay/teaser etc) is a mistake.
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Old 11-14-2017, 04:38 PM   #3
PokerHero77
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Re: Hedging FAQ

I chose the above parlay example because waiting until the final leg of a parlay to hedge is often a mistake.
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Old 11-14-2017, 07:55 PM   #4
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Re: Hedging FAQ

That was an absurd example to use
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Old 11-14-2017, 07:57 PM   #5
PokerHero77
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Re: Hedging FAQ

I forgot to mention that the above parlay was setup with no ties. I'll try to be clear with that in the future, because the possibility of ties will impact hedging tactics.
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Old 11-14-2017, 09:03 PM   #6
akkopower1
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Re: Hedging FAQ

Quote:
Originally Posted by PokerHero77 View Post
I forgot to mention that the above parlay was setup with no ties. I'll try to be clear with that in the future, because the possibility of ties will impact hedging tactics.
Could we please start with something simpler?
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Old 11-14-2017, 09:53 PM   #7
Mihkel05
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Re: Hedging FAQ

Fk the haters. You just made my top 10 power ranking. Then again every other team massive disadvantage against clear #1 overall n00b.

Yes, your example was kinda dumb, but you actually posted real content. That already makes you a 1%er. And I don't think its regurgitated. (BTW Poogs that post recently was quite good and I was impressed. Your English skills have really made it. Congrats.)

If I was to transport myself back in time years ago, lets assume I somehow end up with a large edge + large size position. (IE the synthetic you end up with on a non-simultaneous event with a parlay or teaser.) Obv I wanna eat everything up at 0EV or better. And there are no reasonable solutions for derivs. But what would one do if they simply had +900 for a -300 fave for 18% of their BR. How would I go about solving that?

Not that its useful anymore really, but
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