Taking insurance bets is easy. Just back or lay in multiple markets. Insurance bets allow for complex sports trading strategies but should you take it? Here I will provide some insights to the world of insurance bets.
"If you don't know why you are winning, you probably aren't." That is the simple message for sports trading. Do not take insurance bets if you do not know why you are taking it. In the classic game of blackjack, when you have blackjack but the dealer has a hole card of Ace, you are always asked if you want to take insurance. Well, why not? No matter the dealer has blackjack or not, you are offered a guaranteed win of even-money. Take for example you wager $100 and are offered a $50 insurance bet. If you take it and the dealer does not have blackjack, you win $150 on your initial wager but loses your $50 insurance bet. If the dealer has blackjack, you are returned your $100 initial wager but won $100 (insurance pays 2 to 1) on our insurance bet. You simply cannot lose!!
However, an in depth discussion on this will yield that the insurance bet is simply not worth it for the casino has an edge of 8% on this bet. (outside scope of discussion) For sports trading however, this is not a definite answer. Probabilities can be precisely calculated for card games, but no amount of statistical forecasting can provide an exact probability for the sports event outcome. And worse for those who did not even do any form of match analysis. Your insurance bet is at best, a lucky guess.
And for those who know what they are doing, congratulations. A reasonable estimate of probability must be calculated though. An example would be the very common laying under 1.5 goals and backing 0-0 correct score as an insurance bet in football trading. The objective of laying under 1.5 goals is of course to hope for a goal and back it for a profit. Backing 0-0 acts like an insurance for if the earlier objective is not achieved, you would make money on the insurance bet either by laying it for a profit or waiting the game to end with 0-0 for a larger profit.
One quick look at this strategy and the burning question that arise would be whether the odds move enough for a profit to be made. Since you are exposing yourself with more money, how much does the odds of the insurance bet have to move to make it worthwhile? This is of course governed by the implied probability of the event occurring.
With so many variables to manage, it is at least helpful that with all the odds data before the start of the match, the required probability for all the outcomes can be precisely determined. What is left however is for the sports trader to forecast the real probability of the event happening through detailed match analysis.
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