Hedging is a risk decision that people keep making as if it were a value decision. The math is unambiguous: hedging into a priced market almost always lowers your expected value, because you are paying vig to buy certainty. That does not make it wrong. It makes it a trade you should be able to price before you make it. This lesson gives you the formula, a fully worked example, and the exact dollar cost of the certainty.
The core tension
When you hedge, you place a second bet on the opposite outcome, at a market price that includes the book's margin. That second bet has negative expected value by construction — every bet at a vigged price does, unless you have an edge on it.
