Five positions can add up to one bet if they all depend on the same result. Prediction market hedging starts by seeing that clearly. This lesson shows how to group contracts by shared event, news source, venue and settlement date, and how to cap exposure at the portfolio level instead of trusting each contract's separate value. A payoff inventory lists cost, maximum loss and payout for every outcome. You will work a case where ten shares bought at 40 cents can be sold at 65 cents, and weigh that quick profit against holding to settlement. Offsetting trades bring their own fees and liquidity limits, so the lesson counts those too.
Learning objectives
- Understand the mechanics and assumptions of this technique.
- Reproduce a worked calculation or decision worksheet.
- Identify cases when the evidence supports passing rather than trading.
