Draft Strategy: Hedge Picks
Posted by Erik on September 17, 2008
Fantasy Basketball is a stock picking and trading game. Fine we don’t deal in companies, stocks, and futures but instead we deal in the annual performances (statistical productions) of NBA players. We value, rate, and rank them based on past production – their track record if you will. When we draft players, we are investing in what we perceive to be their potential contributions to our fantasy team’s success over other managers’ portfolios.
In the market we play in, our stocks (players) go through the financial concept of volatility as our players’ values go up and down based on their performances, lack thereof, and/or injuries. That’s why a lot of people in the fantasy blog world borrow the financial strategy concepts of “buy low” and “sell high”. Yes it applies. Yes it works. These concepts and their application are already widely accepted by the people who understand the depth and intricacies involved in playing the game.
I now want to discuss another financial strategy and explore its applications in fantasy basketball. It’s called Hedging. What is hedging? How does it apply to me and my fantasy basketball game?
“In finance, a HEDGE is an investment taken out specifically to reduce or cancel out risks in another investment.”
Hedge (finance), Wikipedia
Hedging in Fantasy Basketball
Without some of you knowing it, you probably already practice the concept.
NBA player’s productions are not absolutely consistent. They go through “off nights” or even slumps. When this happens, normally another player on the same NBA team steps up and compensates. A way to reduce the risk of a player’s production slipping for your fantasy basketball team is to pick players on the same NBA team.
Here’s an example. Let’s say you picked Danny Granger somewhere in the 2nd or 3rd round of this year’s draft. You can hedge his expected nightly production by targeting Mike Dunleavy in the 4th or 5th round. Mike now has additional value for YOUR fantasy team that’s not on paper compared to other manager’s teams. Because if either Mike or Danny has an off night, you can expect or hope the other guy will compensate by increasing his contributions. You will odds are feel the hedging benefit more on the categories of points and treys. This hedging move is still a good investment as it does not necessarily sacrifice player draft value since Mike is a reasonable target at the above mentioned rounds.
Here’s another example. Let’s say you pick Caron Butler in the tail end of the first round, you then have the opportunity to bounce-pick to Gilbert Arenas in the second (this was probably considered viable the other way around a season or 2 ago). Then you can even possibly target Antawn Jamison in the 3rd. These guys represent the collective core of the Washington Wizards’ output night in and night out.
If Gil has a bad night, you can reasonably expect either or both Caron and Antawn to come up with a better than average game to make up for it. Because you basically have the bulk of the Washington Wizards’ scoring production, you can expect more consistency on your Fantasy Team’s production as you off-set particular players’ bad nights. A caveat to this draft move is that your Fantasy team will invariably do as well and as poorly as the Wizards do as a team.
I can visualize the Wiz’s coach saying: “Gil you’ve been lobbing bricks all quarter, dish to Caron and Antawn a bit more until you get your stroke going.”
I’m not sure Gil will acquiesce to his coach’s recommendation, but I’d like to think that he’s developed the maturity to play a more unselfish game.
This example is a little bit on the extreme side as it commits your first 3 round picks and you as a manager may not want your fantasy team to live and die by the Wizards’ performance. For a more in-depth look at the team and these 3 guys, check out 2RR’s Team Preview of the Wizards.
Crowded Front Courts
One of the repercussions of this off-season’s player movement is the pairing up of big men who haven’t played together before: Brand + Dalembert, Camby + Kaman, Bosh + ONeal, Gasol + Bynum (this combo is due to Bynum’s return to active duty). Speculations are abound as to how these pairings will affect the fantasy stats of these big men. There are now perceived risks to drafting some of them as there are fears that their teammates will “eat” into their respective fantasy contributions.
Afraid Chris Bosh’s or Jermaine O’Neal’s big man numbers will take a hit by their being paired together in Toronto’s front court? Then hedge each of their blocks, boards and points by drafting both of them. It then doesn’t matter whoever scores, blocks, or rebounds more or less than average on any given night; because all the stats go to your fantasy team.
The strategy of drafting “Hedge Picks” has greater value in the head to head format compared to rotisserie due to it’s focus on average productions vs season totals. This isn’t a must-do strategy by any stretch of the imagination. I just wanted to shed some fresh light on the way we look at draft picks. Add another facet, if you will.