Tag Archives: USA

To Hedge, or Not to Hedge…

2 Jul

My record stands at 15-15-3 and a profitable 8% ROI. There is only one match left in the Women’s World Cup (betting on a third place game is like betting on an all-star game. Seriously?) and my future bet still stands! I placed my future bet months ago. I loaded up as much as I could, getting the USA to win the WWC at 3.5 to 1. When the WWC started the USA was bet down to 2.5 to 1 so I got pretty good value. My options now are to let it ride and watching to see if USA can prevail, winning me a sweet future bet, or hedging by betting Japan to beat the USA as underdogs mitigating my possible loss but also guaranteeing myself a profitable return.

Here’s the scenario in numbers:

If I let it ride and;

USA wins: 61% ROI, ~$390 profit

Japan wins: -9% ROI, ~$57 loss

If I hedge with Japan (aiming for 10% ROI) and;

USA wins: 44% ROI, ~$318 profit

Japan wins: 10% ROI, ~$71 profit

Neutral hedge (maximized guaranteed return);

USA or Japan wins 28% ROI, ~$226 profit

It’s a tough choice because I really enjoy money (don’t we all) and a guaranteed profit but I also want to root for the USA and win more while cheering them on. If you went to your stock broker and they said “Because you invested so well this month, you will net a 28% guaranteed return…but…if you want to risk it, you could make 70% more but you may incur a small loss.” What would you do? I’m still thinking about my decision but let me know what you would do by voting or leaving a comment below. I will update my spreadsheet Sunday morning with my decision.