Hedging Cubs future
jman
Senior Member
I wanted to get some insight into possible hedging options for games 6/7. I have the Cubs at +775 for the WS to win about 1200. Would it be smart to bet games 6, and 7 for the Indians, or a series bet? Or do you think i should stick it out with the Cubs? Thoughts? Thanks.
Comments
Best way to think about a bet is the differential between win and lose, which for you is around 1350. Most people on here would say you shouldn't hedge unless this is a 'life changing' bet. But I think that assumes homo economicus, and I think most people are not. There can be some pride that you take in backing the Cubs before others, and with a big win sometimes you can mentally set money to one side in your head and say, "This bicycle/hot tub/college fund was due to the Chicago Cubs", etc. But I think you should be aware of how much it will cost you to hedge this. Here's how you do it.
Shop the best price out there for the Indians to win the Series, lets say it is -245. THen find the best price for the Cubs to win, lets say it is +225. Convert to decimals, so you get 1.408 and 3.250. Then take (1/1.408) + (1/3.250) = 1.0178. This means the cost of hedging would be 1-(1/1.0178) = 1.8% of the amount you would spend to hedge it. Its around $550 but I'll leave that for another post. So in this example the "cost" of hedging this can be thought of as 1.8%*550, or around $10.
Spending that $10 in my opinion is sometimes worth it for those of us who gamble for both dopamine and profit. Others get a kick out of always doing the thing that maximizes EV, and they wont spend the $10. I sometimes hedge and typically like to "hedge for less", which preserves some of my rooting interest.