The process you've described isn't really hedging, it's effectively closing out a trade, either through booking a profit, or mitigating a loss. The equivalent i

The process you've described isn't really hedging, it's effectively closing out a trade, either through booking a profit, or mitigating a loss. The equivalent in the equities world is roughly these two cases; today you buy some shares in Acme Oil Company, tomorrow they announce that they've discovered a massive oil well and their share price rockets, so you sell and book a nice profit; or today you buy some shares in Acme Oil Co, tomorrow they announce they've sprung a leak off the coast of Florida and their share price falls, you sell your shares to mitigate the losses you've suffered (and the potential for more losses). That is not hedging; hedging is the process of considering (at the point of purchase) how you can protect your investment against unquantified events. For example you might decide that Apple as a company is undervalued so you want to buy some of their shares, but the markets seem volatile at the moment so you want to hedge yourself against large movements in the index. You can do this by selling short on the index at the same time as you buy your Apple shares. So suppose you're correct about Apple (that they're undervalued) and the market realises this and their share price increases by 1% relative to the index, without your hedge this could see your investment say gain 4% if the index goes up 3%, or lose 2% if the index falls by 3%, so you get either +4% or -2%. Now suppose that you have your index hedge in place, if the market rises by 3%, you get 4% on Apple -3% on the index = 1%, if the market falls by 3% you get -2% on Apple and 3% on the index = 1%. So either way you get the 1% profit through your Apple intuition. By selling the index you've hedged yourself against movements in the underlying market. So to hedge a bet on something like Roger Federer winning against Rafael Nadal in a match today, you need to try and find something else to bet on at the same time. I can't really think of how to do this though.