How to Hedge Your Bets: The Math Behind Locking In Profit

What it means to hedge your bets

To hedge your bets is to place a second wager on the opposite outcome of an existing bet to reduce risk or lock in a guaranteed profit. You already hold a position. Circumstances have changed. Now you are deciding whether to let it ride or protect what you have.

The concept is identical across sportsbooks and prediction markets. You bought something at one price. The market moved in your favor. A hedge converts unrealized gains into a guaranteed payout, at the cost of capping your upside.

Hedging is not the same as arbitrage. Arbitrage places both sides simultaneously before either outcome is known. Hedging places the second side after the first bet's value has changed. Arbitrage is about finding mispriced markets. Hedging is about managing a position you already hold.

The core question is always the same: is locking in profit now worth more to you than the expected value of letting the bet play out?

The hedge formula: how to calculate the second bet

The math is straightforward. You need three numbers: your potential payout on the original bet, the odds available on the opposite side, and how much guaranteed profit you want.

Hedge stake = Original potential payout / Hedge decimal odds

This gives you the exact amount to wager on the opposite side so that both outcomes pay the same total. Your guaranteed profit is then:

Guaranteed profit = Original potential payout - Original stake - Hedge stake

Two inputs, one division, one subtraction. That is the entire hedge calculation. Let me walk through this with real numbers.

Worked example 1: Futures bet that shifted in your favor

You placed a $100 futures bet on the Bucks to win the NBA championship at +2000 (decimal 21.00) before the season. The Bucks are now in the Finals and their odds have shortened to -150 (decimal 1.667) to win the series.

Your position:

• Original stake: $100
• Original odds: +2000 (decimal 21.00)
• Potential payout: $2,100 (profit of $2,000)

The hedge opportunity:

• Opponent moneyline: +130 (decimal 2.30)
• You bet the opponent to win the series

Hedge stake = Potential payout / Hedge decimal odds = $2,100 / 2.30 = $913.04

If the Bucks win: You collect $2,100 from the original bet, minus $100 original stake, minus $913.04 hedge stake = $1,086.96 profit

If the opponent wins: You collect $913.04 x 2.30 = $2,100 from the hedge, minus $913.04 hedge stake, minus $100 original stake = $1,086.96 profit

That is $1,086.96 guaranteed, regardless of outcome. Compare that to the alternative: let it ride for a chance at $2,000 profit, with a real probability of walking away with nothing.

Run these numbers through the EV calculator to see what the expected value of each option looks like.

Worked example 2: Live bet hedge mid-game

You bet $200 on the Eagles -3.5 at -110 (decimal 1.909) before an NFL game. The Eagles are up 14-0 at halftime. The live moneyline on the Cardinals is now +450 (decimal 5.50).

Your position:

• Original stake: $200
• Original potential payout: $200 x 1.909 = $381.82

Hedge calculation:

• Cardinals live ML: +450 (decimal 5.50)
• Hedge stake = $381.82 / 5.50 = $69.42

If Eagles cover -3.5: You collect $381.82 - $200 - $69.42 = $112.40 profit

If Cardinals cover (or Eagles win by less than 3.5): You collect $69.42 x 5.50 = $381.81 - $69.42 - $200 = $112.39 profit

Guaranteed profit of roughly $112, regardless of second-half outcomes. The tradeoff: your maximum upside dropped from $181.82 to $112.40. Whether that tradeoff makes sense depends on how likely you think the Eagles are to cover the second half spread and how much variance you can stomach.

How to hedge a bet on prediction markets

Prediction markets add an option sportsbooks do not offer: you can sell your existing position directly instead of hedging with a second bet. This changes the math.

On Kalshi and Polymarket, you have two choices when a contract moves in your favor:

Option 1: Sell the contract. If you bought "Yes" at $0.30 and it is now trading at $0.75, sell for an immediate $0.45 profit per contract minus fees.

Option 2: Buy the opposite side. Buy "No" at $0.25 to lock in a guaranteed payout. You pay $0.30 + $0.25 = $0.55 total. The contract pays $1 regardless of outcome. Guaranteed profit: $0.45 minus fees.

These two options are mathematically equivalent before fees. After fees, one is usually cheaper. Selling incurs one transaction. Buying the opposite incurs a second transaction fee. On Kalshi, where taker fees are 7% x p x (1-p), buying the opposite side often costs more in fees than simply selling.

Worked example 3: Prediction market contract hedge

You bought 100 contracts of "Fed cuts rates in June" at $0.35 each on Kalshi. Total cost: $35.00. The market has moved to $0.72.

Option A: Sell at $0.72

• Revenue: $72.00
• Kalshi taker fee on sell: 7% x 0.72 x 0.28 = $0.01411 per contract = $1.41 total
• Net profit: $72.00 - $35.00 - $1.41 = $35.59

Option B: Buy 100 "No" contracts at $0.28

• Cost: $28.00
• Kalshi taker fee on buy: 7% x 0.28 x 0.72 = $0.01411 per contract = $1.41 total
• Total invested: $35.00 + $28.00 + $1.41 = $64.41
• Guaranteed payout: $100.00 (one side always pays $1)
• Net profit: $100.00 - $64.41 = $35.59

Same result in this case. But if the fee structure differs between buying and selling (some platforms charge asymmetric maker/taker fees), one path will be cheaper. Use the prediction market fee calculator to compare both options for your specific platform.

For the full breakdown of how platform fees affect your edge, read prediction market fees explained.

When to hedge: the two valid reasons

Hedging is not always the right move. There are exactly two situations where it makes mathematical sense.

Reason 1: Lock in profit when your risk tolerance has changed. You placed a $50 futures bet for fun. It is now worth $3,000. That $3,000 matters to you in a way the original $50 did not. Your financial situation has changed, or the amount at stake has crossed a threshold where losing it would be painful. This is a bankroll management decision, not an EV decision. For the math behind proper bet sizing, the Kelly Criterion gives you a framework for what "too much exposure" actually means.

Reason 2: You have new information that changes the expected value. Your original bet was +EV when you placed it. Since then, something changed: an injury, a lineup change, new polling data. The bet may no longer be +EV at the current odds. Hedging captures the value that has already accrued before the edge disappears.

Step 1Hold existing +EV position

→

Step 2Market moves in your favor

→

Step 3Reassess: still +EV to hold?

→

Step 4Yes → let it ride

→

Step 5No → calculate hedge

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Step 6Execute hedge on best available odds

When NOT to hedge: the EV cost most bettors ignore

Here is the part most hedging guides skip. Hedging almost always has a negative expected value impact. Every time you hedge, you are paying vig on the second bet. That vig is the cost of certainty.

Take the Bucks futures example. You locked in $1,086.96 guaranteed. But what was the EV of letting it ride?

If the Bucks have a 60% chance to win the Finals (implied by their -150 odds):

EV of no hedge = (0.60 x $2,000) + (0.40 x -$100) = $1,200 - $40 = $1,160

EV of hedge = $1,086.96 (guaranteed)

The hedge costs you $73.04 in expected value. That is the price of eliminating variance. Whether that price is worth paying depends on your bankroll, your risk tolerance, and whether $1,086.96 certain is more valuable to you than $1,160 in expectation.

The math gets worse on smaller bets. Hedging a $20 bet where you are paying 4.5% vig on the hedge side eats a disproportionate share of your expected profit. For bets that are small relative to your bankroll, the Kelly Criterion already accounts for optimal risk management. The correct move with a small +EV bet is almost always to let it ride and let the math play out over volume.

This connects to bankroll turnover. Letting +EV bets play out, rather than hedging them, is how your bankroll compounds. Each hedge interrupts that compounding. Over hundreds of bets, the cumulative cost of unnecessary hedging is significant.

For a deeper look at how EV drives every betting decision, read expected value explained.

Hedging vs. arbitrage: the critical distinction

People confuse these constantly. Here is the clean separation.

If you are placing two opposing bets at the same time, that is not hedging. That is arbitrage. For the complete walkthrough, read cross-platform arbitrage and live arbitrage betting.

If you have an existing position and the market moved, the question is whether to hedge or hold. That is a risk management question, and the answer depends on your bankroll, the size of the position, and the EV cost of the hedge.

The advanced angle: partial hedging

You do not have to hedge 100% of your position. Partial hedging lets you lock in some profit while keeping upside exposure.

Using the Bucks example, instead of betting $913.04 on the opponent, bet half: $456.52.

If the Bucks win: $2,100 - $100 - $456.52 = $1,543.48 profit

If the opponent wins: $456.52 x 2.30 - $456.52 - $100 = $493.48 profit

You are guaranteed at least $493.48 with a chance at $1,543.48. The minimum is lower than the full hedge ($1,086.96), but the maximum is higher. Partial hedging preserves more expected value while still establishing a floor.

This is the practical sweet spot for most bettors. Full hedges sacrifice too much EV. No hedge means full variance. A 40-60% partial hedge gives you downside protection without gutting your upside. The exact percentage depends on where the position sits relative to your total bankroll. If it represents more than a Kelly-sized fraction of your bankroll, hedge the excess. If it is within Kelly parameters, let it ride.

Frequently asked questions

How do you hedge a bet after placing it?

Place a second bet on the opposite outcome at the current odds. Divide your original potential payout by the decimal odds of the hedge bet to find the exact stake needed. The hedge locks in profit regardless of outcome.

Is hedging a bet worth it?

Only in two situations: when the amount at risk has grown beyond your risk tolerance, or when new information has changed the expected value of your original position. For small bets relative to your bankroll, hedging costs more in EV than it saves in risk.

What is the formula for hedging a bet?

Hedge stake = Original potential payout / Hedge decimal odds. For a $100 bet at +2000 with a hedge available at +130 (decimal 2.30): $2,100 / 2.30 = $913.04.

Can you hedge bets on prediction markets?

Yes. You can either sell your existing contract at the current market price or buy contracts on the opposite outcome. Both methods lock in profit. Selling is often cheaper because it incurs only one transaction fee instead of two.

What is the difference between hedging and arbitrage?

Hedging places a second bet after the market moved on an existing position. Arbitrage places both sides simultaneously on a currently mispriced market. Hedging has an EV cost. Arbitrage captures a risk-free edge.