Cash out and greening up: locking in a result before the end

You backed a tennis player at 3.00 for ₹1,000 and she won the first set. Her price is now 2.00. You could let the bet run and win ₹2,000 or lose ₹1,000. Or you could lock in a profit now, whatever happens in the rest of the match. That is cashing out, and on an exchange you can do it yourself with one more bet.

The idea

You have a back bet. If you now lay the same player, you have two bets pulling in opposite directions. If she wins, the back pays and the lay costs; if she loses, the back costs and the lay pays. Size the lay correctly and the two results are identical: you have "greened up", meaning both outcomes show the same green figure on your screen.

The arithmetic

After a back bet of stake S at odds B, with the lay price now L, the lay stake that equalises the result is:

Lay stake = S x B / L

With S = ₹1,000, B = 3.00 and L = 2.00, the lay stake is ₹1,500. Check it:

• She wins: back profit ₹2,000, lay liability ₹1,500 x (2.00 - 1) = ₹1,500. Net +₹500.
• She loses: back loses ₹1,000, lay wins ₹1,500. Net +₹500.

Either way you are ₹500 up before commission, and commission is charged once, on the net ₹500. The general result is S x (B / L - 1): ₹1,000 x (3.00 / 2.00 - 1) = ₹500. The cash-out calculator does this for any numbers, and for the mirror case where your first bet was a lay (then the back stake is S x L / B).

What a cash-out button does

A site's cash-out button performs the same calculation and places the opposite bet for you, usually at the current price, sometimes with its own margin taken from the figure it offers. It is convenient and it is a product. The figure it shows is not a gift; it is the market price of your position, less whatever the site keeps. Doing the sum yourself tells you what the plain figure is. winzap.vip lists cash out as a feature of its exchange at the time of writing; how its button works is described on that site.

When it is worth doing

Only you can decide whether ₹500 certain is better than a coin-flip between ₹2,000 and -₹1,000. Mathematically the expected value is similar either way (slightly lower after the extra commission), so cashing out is about risk, not value. It is useful when you no longer believe the price you took, or when the swings are more than you want to carry. It is a bad habit when it is done out of nerves on every bet, because the extra bet always costs a little.

Two cautions

• The hedge must be matched. If the lay is only partly matched, you are only partly hedged.
• In play, the price can move during the delay. The figure you planned may not be the figure you get.

Next: reading the market: overround and liquidity.

Information only, 18+. Real-money online gaming is restricted in India: see the lesson on the law.