Hedge

Also called hedging · laying off

Buying the opposite side of a position you already hold, to reduce or remove the outcome you are exposed to.

Hedging math is forward-looking. What you already paid is sunk, appears identically in every branch, and must not be part of the decision — only of the accounting.

Hold N contracts bought at price e, and buy H contracts of the opposite side at an all-in cost c. If your side wins, the total is N − H·c − N·e; if it loses, the total is H − H·c − N·e. Set H equal to N and both branches collapse to N × (1 − c − e), which is the proof that a full hedge is a lock rather than a hope. Worked: a hundred contracts bought at 40¢, with the opposite side quoted at 55¢ on Kalshi where the fee adds 1.7¢, locks about $3.27 either way.

The breakeven is worth memorising because it is so simple: c = 1 − e. While the opposite side costs less all-in than one minus your entry, hedging locks a profit. Once it costs more, hedging locks a loss — which is sometimes still the right trade, if the alternative is exposure you can no longer carry, but you should know that is what you are doing. Partial hedges sit between the two branches proportionally.

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Definitions describe how Polymarket and Kalshi behave and how WhaleTracks models them; venue rules and fee schedules can change, so confirm anything you size a position on with the venue itself. WhaleTracks is informational analytics, not financial advice. Past performance does not guarantee future results.