How to Hedge a Prediction Market Position

What is Hedging?

Hedging means buying the opposite side of a position you already hold. In prediction markets, if you own YES shares that have increased in value, you can buy NO shares to guarantee a profit — no matter which way the event resolves.

Think of it as "cashing out" a portion of your winnings while the market is still open, without actually selling your position.

Step-by-Step Example

Either way, you make roughly $300. The hedge guarantees your profit is locked in.

Why Does Hedging Work?

On Polymarket, YES + NO shares always pay out exactly $1.00 total. If you hold both YES and NO shares in equal quantities, you're guaranteed to receive $1.00 per pair no matter the outcome. The profit comes from the difference between your entry price and the cost of the hedge.

The key insight: if you bought YES at $0.40 and NO is now $0.30, the combined cost of one YES + one NO = $0.70. Since they always pay out $1.00, that's a guaranteed $0.30 profit per pair.

The Role of Fees

Polymarket charges approximately 2% taker fees on each trade. When you hedge, you pay fees on both the original YES purchase and the new NO purchase. This reduces your guaranteed profit slightly but does not change the core strategy.

Always calculate fees before hedging. Our calculator automatically deducts fees from the result.

When Should You Hedge?

• When you're in significant profit and want to protect gains before a volatile event.
• When new information has made the outcome feel less certain.
• When the guaranteed profit after fees exceeds what you'd gain by holding.
• When you need liquidity but don't want to fully exit your position.

Partial Hedging

You don't have to hedge 100% of your position. Buying fewer NO shares than YES shares you hold locks in a partial profit while leaving upside exposure. For example, hedging 50% of a 1,000-share YES position means you still benefit more if YES wins, but you're protected if NO wins.