2 team parlay paying +260
Guy wins his two teamer. +260
3 team parlay paying +600
Guy wins his first two and decides to hedge the last leg
366 to win 333 for the hedge. $233 of profit
People who hedge are basically playing a parlay of one leg less, but getting a much worse payoff than they would have got by playing a 2 instead of a 3 and hedging, or a 3 instead of a 4 and hedging. Etc
By far one of the most common misconceptions of bettors.