Now, let’s take a look at an example of hedging a parlay bet.
Let’s assume you’ve bet $100 on a 6-leg NBA parlay bet. At +500 odds, you stand to earn a hefty $500 profit if all your picks hit.
You’ve nailed the first 5 legs and the last game (Knicks vs. Lakers) starts later. In your parlay, you got the Lakers to win outright, but you’re not feeling great about their chances.
You could ride out the +500 and hope the Lakers win, or you can place a hedge bet on the Knicks at -130 and see some kind of a profit, regardless of which team wins the game.
If you take the safe route, the optimal hedging amount would be $339.13. The potential win has plummeted from $500 to $160.87, but the latter amount is guaranteed whereas you only get the $500 if the Lakers pull out the win.
Just like in the first example, you may choose to hedge a lower amount—say $200—on the Knicks if you still think the Lakers will win or want to root for them. In this case, you would profit $300 if the Lakers win ($600 payout – $300 wagered) and $53.85 if the Knicks win ($353.85 payout – $300 wagered).