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Conference Finals Hedge Mailbag: What to Do With Rockets, Knights Futures

May 12, 2018 12:41 PM EDT

The Highlights

  • Bettors holding futures tickets on NBA and NHL teams might be asking the question: Should I hedge?
  • The numbers may suggest one approach, but the head and heart quite another.
  • We dive in to the data to explore the best hedging strategies for a pair of gamblers who have tickets on Houston and Vegas, respectively.

Bettors holding future tickets in both the NBA and NHL have been waiting almost eight months for this moment: the conference finals! Whether you thought the Warriors were going to repeat or you were among the lucky few who bought into the expansion Vegas Golden Knights, if your ticket is still alive, you are asking yourself this question: Should I hedge? Glad you asked.

We should stress to the folks who were kind enough to send in questions and to others holding similar tickets: There’s no perfect answer with any of these scenarios. Our goal is to give you a sense of your options and ultimately tell you what our staff of experts would do if they were holding your ticket.

But here’s the thing: We’re not holding your ticket, and we might have a different risk tolerance than you. So if you want to let your lottery ticket ride, you absolutely should. And if you want to hedge, there’s no shame in locking in a little profit while the numbers work in your favor.

That’s enough of a preamble. Let’s take a look at two potential hedging scenarios submitted by readers for the final four in the NHL and NBA.

All odds as of Friday evening.

 


Reader Question:  I’m a Rockets fan sitting with a 30-to-1 ticket on Houston to win NBA Championship… and I put a multiple unit bet on it.

I placed the bet one night when I got an alert that the Clippers and Rockets were in talks about a Chris Paul trade. I thought those odds were absolutely ridiculous. BEFORE the trade, they should have been around 12-to-1. Any advice? — Carter H.

The setup: Warriors are -210 series favorites against the Rockets (+175).

For your head: A consensus projection compiled using simulations from ESPN, Basketball-Reference.com and NumberFire.com gives Houston a 49.77% chance of winning the NBA championship.

The Rockets, according to the math, are the favorites to lift the Larry O’Brien Trophy. You have the best team at basically the best possible odds. Let it ride. You never hear any stories about the time a gambler had the nuts and hedged.

For your heart: But James Harden and co. aren’t the favorites in Vegas. The oddsmakers fear the “Hampton Five” — Steph Curry, Klay Thompson, Draymond Green, Andre Iguodala and Kevin Durant, who they recruited to the team on a trip to the Hamptons. This death lineup is +40.9 points per 100 possessions in the playoffs this season. The Rockets haven’t faced this unit. You should have hedged yesterday!

Our advice: The simulations are likely undervaluing the Warriors due to regular-season injuries that depressed their season-long statistics. With a multi-unit bet at 30-1 odds, there is room to hedge not only for the series, but to potentially take advantage of the first two games in Houston with the shorter price on Golden State. With Houston holding home-court advantage mixed with the generous 30-1 price on the Rockets, Carter has a serious edge heading into Game 1. If the series opened at Oracle Arena, the price to hedge against Houston would have been significantly higher prior to the series starting and even potentially through the first two games at home depending on result.


Reader Question: I have a Vegas Golden Knights 200-to-1 ticket to win it all… How do I hedge? — Grayson Allen (@Filipo18)

The setup: The Golden Knights are +120 series underdogs against the Jets (-140).

For your head: At $100, a ticket on the Golden Knights at 200-1 would pay out $20,000 if Vegas can capture the Cup. That’s a lot of trips to the buffet out in the desert. Very few expected the expansion team to make it this far, so it’s time to secure a profit.

For your heart: In eight wins this postseason, Marc-Andre Fleury has posted four shutouts. He has a .951 save percentage and a 1.53 goals against average. The netminder is the favorite to win the Conn Smythe Trophy — the playoff MVP. Blah, blah, blah. Even Fleury’s mom would hedge this bet.

Our advice: Let’s assume you put $100 on Vegas at 200-1 for a potential profit of $20,000. The Golden Knights currently have the third-best odds to win the Cup at +340, behind Tampa Bay (+175) and Winnipeg (+225). When you remove the juice and calculate the implied probability, the team’s chance of winning it all is 21.5%. So the expected value of your ticket is $4,300 ($20,000 X 21.5%)… which equates to a great opportunity given the margin. With Winnipeg holding home ice, hedging before Game 1 is the smart strategy, especially considering Vegas’ home/road splits this season. If the Golden Knights can steal Game 1 or 2, opportunities will open up later in the series with more games being played at T-Mobile Arena.


Top Photo: Chris Paul (L) and James Harden (R)

Credit:

Matthew Emmons-USA TODAY Sports

Follow Evan Abrams on Twitter
@EvanHAbrams

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