As you may have heard, this season’s Final Four features a quartet of teams who each had really long odds to win the NCAA crown at various points of the season.
At one point, San Diego State was 80-to-1, UConn was 90-to-1, Miami was 150-to-1 and Florida Atlantic was a juicy 300-to-1. If you’re one of the lucky people who have these pending futures tickets, it’s time to start thinking about hedging, and below we’ll walk you through some options.
If I can help further, I have UConn beating Miami in my March Madness tournament picks page.
No Right Answer
When it comes to hedging, it’s important to know there is not one specific strategy or formula to follow. Some professional bettors rarely hedge, while others hedge aggressively and often.
Asking five professional bettors their opinion on how to hedge your NCAA futures ticket might prompt five different strategies. As you read this piece, keep in mind you’re hearing one person’s perspective and there are many experts who would disagree or handle things differently.
A Case Study On Hedging
For the purposes of this article, let’s say the futures ticket we are considering hedging is UConn’s 90-to-1 odds with a $100 wager, returning $9,100.
Below are some questions you need to ask yourself to help you determine your hedge strategy:
- What’s the current futures price on UConn to win it all?
- How much is $100 to you?
- How much is $9,100 to you?
- How much conviction do you have on UConn winning it all?
- How risk-averse are you?
The first question has an answer (-125) and gives us an idea of how likely your bet is to cash at this point (at least according to bookmakers and the market).
Using implied odds, you now know you have about a 55 percent chance of winning $9,100 and a 45 percent chance of losing $100.
Questions 2 and 3 are going to have different answers for everyone depending on their bankroll, lifestyle and financial situation.
For instance, some people lose $100 and barely notice the difference in their bankroll, while for others, it’d sting and be a major issue.
If losing $100 would be bad for you, I think it’s a no-brainer here to hedge the next two games (on Miami and then on UConn’s potential championship game opponent) to at least ensure you’re not going to lose your original wager.
As someone who is more liberal with hedging strategies than most, I think you should also hedge here if $100 isn’t a lot of money to you, but it’s at least easier to see the anti-hedge perspective here.
For instance, you might be thinking, “I don’t care if I lose $100, it’s worth it to me to risk it because I really want that $9,100.” This line of thinking is rational and logical, but not if you’re suddenly not feeling as confident in UConn or think they could be vulnerable against Miami.
This is where Question #4 about conviction comes in.
As a general rule, the more conviction you have in your original bet, the less aggressive the hedge. Of course, when I’m talking about conviction, I’m talking about data-backed rationale, not conviction based on your gut or your favorite team playing in the game.
Question #5 will help you determine the specific size of your hedge. The more averse to risk you are, the larger your hedge should be. If you’re more comfortable with risk, perhaps a smaller hedge is in order.
Forecasting
Assume for a moment that UConn is in the NCAA title game – we know they’d face either FAU or San Diego State. It’d be wise to come up with some hypothetical moneyline or point spreads for this game so you have a sense of what you’ll be up against to seal your bet.
I reached out to Circa’s sportsbook director Jeffrey Benson on Twitter and asked him for the potential point spreads for the two possible UConn championship game scenarios and he said UConn -8 vs FAU and UConn -5.75 vs SDSU.
These of course can change if one team looks really good or bad in their semifinal matchup, but it’s a great barometer of what to expect.
UCONN -8 vs. FAU
— Jeffrey Benson (@JeffreyBenson12) March 28, 2023
UCONN -5.75 vs. SDSU
This tells us that the SDSU moneyline vs UConn would be somewhere roughly around +200 and the FAU moneyline vs UConn would be in the neighborhood of +280.
Since UConn needs to win two more games in order for your bet to cash, it’s important to be prepared to hedge twice in back-to-back games. With this in mind, let’s take a close look at best-case and worst-case scenarios with various degrees of hedging.
For instance, right now you’re either going to win $9,100 if UConn wins (best case) or you’re going to lose $100 if UConn doesn’t win (worst case).
With a $500 hedge on the Miami moneyline, your worst-case scenario is that you lose $100 (original wager) and win $1,000, meaning your worst-case scenario is a $900 profit and your best-case scenario is still UConn winning but your max profit is $8,600 (to account for the $500 loss on Miami).
To many people, a +$900 or +$8,600 best-case/worst-case scenario is a lot better than a -$100 or +$9,100 best-case/worst-case scenario. If you agree, then you should be able to appreciate the beauty of hedging.
I recommend running these hypothetical scenarios with various size hedges on Miami +200 and SDSU +200 or FAU +280 until you get a best-case/worst-case scenario you’re comfortable with.
The Middle Hedge
So far I’ve focused on hedging via the moneyline on UConn’s opponents, but another option is to bet the opponent on the point spread.
The downside here is that you have to risk more money to win $1,000 because you’ll likely be paying -110 odds on +5.5 instead of +200 on the Hurricanes moneyline.
However, the benefit is that you can create a “middle” in which your hedge hits and UConn advances.
For instance, if you bet $1,000 on Miami +5.5 and the Huskies win by one to five points, then your UConn futures bet is alive and you just acquired more money from your hedge.
Keep in mind, you could hedge with both the moneyline and with the point spread. For instance, $250 on the moneyline and $750 on the point spread, depending on your conviction on whether UConn covers the spread or not.
