NO

#Definition

NO is one of the two outcomes in a binary prediction market, representing the negative resolution - the proposition or question being answered as false or not occurring.

When you buy NO shares, you're betting that the event will NOT happen or the statement is false. If the market resolves NO, your shares become worth $1.00 each.

#How NO Shares Work

#Buying NO

When you buy NO shares at 40¢:

• You pay $0.40 per share
• If market resolves NO: You get $1.00 per share (60¢ profit, 150% return)
• If market resolves YES: You get $0.00 per share (40¢ loss, -100% return)

#NO Price = Probability of NOT Happening

The price of NO shares represents the market's estimated probability that the event does NOT occur:

• NO trading at 70¢ = 70% chance the event WON'T happen (30% chance it WILL)
• NO trading at 30¢ = 30% chance it WON'T happen (70% chance it WILL)
• NO trading at 50¢ = 50/50 odds

#YES + NO = 100%

In efficient markets:

• YES price + NO price ≈ $1.00
• If YES is 65¢, NO should be ~35¢
• If NO is 20¢, YES should be ~80¢

#Trading Strategies with NO

#Buying NO (Betting Against)

Buy NO when you believe:

• The event is less likely than the market thinks
• The YES price is overinflated
• You have information suggesting the event won't occur

Example:

Market: "Will Bitcoin reach $200k this year?"
YES trading at: 80¢ (implying 80% chance)
Your analysis: Only 20% chance
Action: Buy NO at 20¢ (expected value: 80% × $1.00 - $0.20 = $0.60)

#Selling NO (Bullish on Event)

Sell NO when you believe:

• The event is MORE likely than market suggests
• You want to profit from YES without buying YES
• You want to lock in profits from previous NO purchase

#NO vs. Shorting YES

Two economically similar positions:

Differences:

• NO purchase: Limited risk (max loss = 40¢)
• YES short: Limited risk (max loss = 60¢, but margin requirements vary)
• Platform support: Not all platforms allow shorting; buying NO is universal

#NO in Different Market Structures

#Binary Markets

• One YES, one NO
• Clear complementary outcomes
• Example: "Will it snow tomorrow?" → YES (snows) or NO (doesn't snow)

#Categorical Markets

• Multiple options, your NO is against specific outcome
• Example: "Who wins the election?"
  • Buy NO on "Trump" = bet anyone except Trump wins
  • This is effectively buying YES on "Not Trump"

#Scalar Markets

• NO might mean "below threshold"
• Example: "Unemployment > 5%?"
  • NO = unemployment ≤ 5%

#When to Buy NO

#Contrarian Positions

NO buyers often:

• Go against popular sentiment
• Bet on status quo continuing
• Identify overreaction in YES pricing

Example:

Public panic about asteroid impact
YES (asteroid hits) jumps to 40¢
Scientists say 1% chance
Buy NO at 60¢ (expected value: 99% × $1.00 - $0.60 = $0.39)

#Fade the Hype

When markets overreact to news:

• IPO will 10x → Probably not (buy NO)
• Movie will break all records → Probably not (buy NO)
• Political scandal ends career → Maybe not (buy NO)

#Base Rate Betting

Rely on historical frequencies:

• "Will there be a recession this year?"
• Recessions happen ~15% of years historically
• If YES is >20¢, consider NO

#Psychological Challenges of NO Trading

#Fighting Optimism

People naturally:

• Want positive outcomes
• Dislike "rooting against" events
• Feel uncomfortable betting NO

Overcome by: Separating investment from emotion

#Narrative Bias

Compelling stories drive YES buying:

• "The underdog will win!"
• "This time is different!"
• "Revolutionary technology!"

NO buyers must resist narratives and focus on probabilities.

#Social Pressure

In group settings:

• Contrarian NO position may be unpopular
• "You don't believe in us?" pressure
• Fear of being wrong publicly

Example: Company employee betting NO on company success

#NO Share Value Over Time

NO shares gain value when:

1. Negative Information Emerges

   • Event becomes less likely
   • Contradictory evidence appears
   • Timeline makes event impossible

2. Time Decay (for unlikely events)

   • As deadline nears, unlikely events stay unlikely
   • NO price rises as YES hope fades

3. Event Doesn't Materialize

   • Deadline passes without occurrence
   • NO resolves, shares worth $1

#NO Trading Mistakes

#1. Confusing NO Price with Odds

❌ Wrong: "NO is 70¢, so the event is 70% likely" ✅ Right: "NO is 70¢, so the event is 30% likely"

#2. Paying Too Much for "Safe" NO

Just because YES seems unlikely doesn't make NO a good buy:

• If event has 1% chance, NO should be 99¢
• Buying NO at 95¢ means 4% return for 1% risk
• Not worth it unless you're certain

#3. Not Considering "NO" Scenarios

Buying NO on "Biden wins" isn't just "Trump wins":

• Could be third-party candidate
• Could be neither due to unprecedented event
• Read resolution rules carefully

#4. Ignoring Time Value

Locking up capital in 90¢ NO shares for 6 months:

• Only 10¢ max profit
• Could earn more elsewhere
• Opportunity cost matters

#Advanced NO Strategies

#NO Arbitrage

If related markets mispriced:

Market A: "Trump wins" → YES at 55¢
Market B: "Democrat wins" → YES at 55¢

If only one can win:
Buy NO on both at 45¢ each (90¢ total)
At least one resolves NO → Get $1.00 back
Profit: 10¢ guaranteed

#NO Hedging

Protect against unwanted outcomes:

• Own Tesla stock → Buy NO on "Tesla hits $500" to hedge downside
• Farmer → Buy NO on "Good harvest year" as insurance

#NO Momentum

When YES price falling rapidly:

• Market recognizes event unlikely
• Buy NO to ride momentum down
• Sell when NO price stabilizes

#Synthetic Long NO

On platforms without NO shares:

1. Short the YES shares
2. Economically equivalent to long NO
3. Different margin/fee implications

#NO Liquidity Considerations

NO side liquidity depends on:

• YES buyers: Counterparties to your NO position
• Market sentiment: Contrarian NO may have less liquidity
• Market size: Larger markets support both sides

High liquidity NO:

• Major events (elections, earnings)
• Balanced sentiment
• Multiple market makers

Low liquidity NO:

• Niche markets
• Strong YES consensus
• One-sided positioning

#NO in Platform-Specific Contexts

#Kalshi

• NO contracts explicitly traded
• Order book shows NO bids/asks
• Regulated environment ensures fair NO pricing

#Polymarket

• NO tokens (ERC-20)
• Can hold NO tokens in wallet
• Redeem for $1 USDC if resolves NO
• Trade NO tokens on secondary markets

#PredictIt

• NO shares available
• $850 position limits apply to both YES and NO
• NO purchases count toward limit

#The Value of NO

NO trading serves important functions:

1. Price Discovery: NO buyers prevent irrational YES exuberance
2. Market Efficiency: Contrarians keep prices honest
3. Risk Management: NO as insurance/hedge
4. Liquidity: NO buyers provide exit for YES sellers

Without NO buyers, markets would be one-sided and inefficient.