# How to Short on Polymarket
Polymarket has no "short" button — you can't borrow a share and sell it the way you'd short a stock. But you can absolutely take a position that **profits when an outcome fails**, and you can do it with leverage. This guide explains how shorting works on a prediction market, how to short any Polymarket outcome by buying its complement, and how to amplify that short up to 5x using PredMart — with a full worked example and the risks involved.
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## Can You Short on Polymarket?
Yes — by buying the **complementary outcome**. What you *can't* do is borrow a share and sell it short the way you would with a stock; Polymarket has no share-lending, so there's no dedicated "short" button. You don't need one. Because a binary market's two outcomes always sum to about $1.00, buying "No" at $0.20 is mechanically a short on "Yes" at $0.80 — identical payoff: you gain $0.80 if the event fails and lose $0.20 if it happens. That's a real short position, just built from the complement instead of a borrow.
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## Shorting = Buying the Complement
To short an outcome on Polymarket, you buy the outcome that wins when it loses.
| Your view | The "short" | You buy | You profit if |
|---|---|---|---|
| "Yes" is overpriced at $0.80 | Short Yes | **No** at $0.20 | The event does **not** happen (No → $1.00) |
| A favorite candidate won't win | Short that candidate | That candidate's **No** | The candidate loses |
For **multi-outcome (NegRisk) markets** — like "Who will win the election?" — each candidate has its own Yes/No pair. To short a specific candidate, you buy that candidate's **No** token. Everything below works identically.
The catch with plain "buy No": your maximum gain is capped by how much capital you put in. That's where leverage comes in.
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## Why Short with Leverage
Buying $1,000 of "No" at $0.20 gets you 5,000 shares. If the event fails, they pay $5,000 — a good return, but limited by your $1,000. Leverage lets you control a larger short position for the same equity, so the payoff (and the risk) scales up.
> On PredMart, a leveraged position on the **Yes** token is a leveraged **long**; a leveraged position on the **No** token is a leveraged **short**. Same engine, opposite side.
PredMart treats the "No" token like any other collateral: you can open a leveraged position on it up to **5x at any price**, with one signature. You don't have to buy the No shares first — automated leverage buys them for you and books them as collateral in a single operation.
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## Step by Step: A Leveraged Short via PredMart
**Step 1 — Pick the outcome you think is overpriced.** Say "Yes" trades at $0.80 and you believe the real probability is closer to 60%. Your short is the **No** token at $0.20.
**Step 2 — Open a leveraged position on No.** In PredMart, select the market's No token, choose your leverage (up to 5x), and sign a single **LeverageAuth** message. The `tokenId` you sign is the No token; the smart contract enforces that borrowed USDC can only go to your own Gnosis Safe.
**Step 3 — PredMart executes atomically.** It combines your USDC equity with a USDC advance from the lending pool, buys the No shares on Polymarket's CLOB (Fill-or-Kill, with a 5% slippage bound on the open), books the No shares as collateral, and records the advance as debt — all in one transaction.
**Step 4 — Manage the position.** Watch your health factor, and optionally set a Stop-Loss / Take-Profit. Your short is liquidated if the No price falls far enough (i.e., if "Yes" keeps climbing).
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## Worked Example
- **Your view:** "Yes" at $0.80 is too high → short it by buying **No at $0.20**
- **Equity:** $1,000 **Leverage:** 4x → **$4,000** position
- **Pool advance (debt):** $3,000
- **No shares bought:** $4,000 ÷ $0.20 = **20,000 shares**
- **Health factor at open:** (20,000 × $0.20 × 0.90) ÷ $3,000 = **1.20**
- **Liquidation price (No):** ~$0.167 — i.e., if "Yes" rises from $0.80 to about $0.833, you're liquidated
**Scenario A — the event does NOT happen (No → $1.00):**
20,000 × $1.00 = $20,000. Repay ~$3,000 debt → ~$17,000 surplus. Profit = $16,000; the 10% profit fee takes $1,600 → **net ≈ $15,400 on $1,000 equity.** (Buying No unleveraged would have returned ~$4,000.)
**Scenario B — the event happens (No → $0.00):**
Your short was wrong. You lose your **$1,000 equity**. The $3,000 advance becomes bad debt absorbed by the pool — PredMart is non-recourse, so you owe nothing more.
**Scenario C — "Yes" climbs to $0.84 before resolution:**
No falls to ~$0.16, below your ~$0.167 liquidation price. The position is liquidated: collateral is sold, the debt repaid, a 5% liquidator fee charged, and you lose your equity.
> **Warning:**
> Shorting a favorite is a low-probability, high-payout bet — the market priced "Yes" at 80% for a reason. Leverage makes the payoff bigger *and* moves your liquidation price closer. Size the position so a normal upward swing in the outcome you shorted doesn't liquidate you before resolution.
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## The Risks of Shorting on Polymarket
1. **You're betting against the odds.** A short on an $0.80 outcome wins only about 20% of the time (by the market's own pricing). Expect to be wrong often; the math works only if the payouts justify it.
2. **Amplified losses and liquidation.** Leverage moves your liquidation price closer to the current price. A modest rise in the outcome you shorted can wipe the position before resolution.
3. **Interest accrues.** The pool advance accrues borrow interest continuously, lowering your health factor over time even if the price doesn't move.
4. **Thin books.** Deep "No" liquidity isn't guaranteed on every market; wider spreads and lower borrow caps apply to thin markets.
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## Fees
A leveraged short carries the same costs as any PredMart leverage position: a flat per-operation fee (you pay no gas directly), borrow interest while open, and a **10% profit fee** on gains when you close in profit (7% to lenders, 3% to the protocol). Losses and liquidations are not charged the profit fee.
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## Frequently Asked Questions
### Can you short on Polymarket?
Not with a dedicated short-sell, but yes in effect: you short any outcome by buying its complement (buy "No" to short "Yes"). With PredMart you can do it with up to 5x leverage.
### How do you bet against an outcome on Polymarket?
Buy the opposite outcome. In a binary market, buying "No" pays $1.00 if the event doesn't happen — that's a short on "Yes." In multi-outcome markets, buy a candidate's "No" token.
### Can you short with leverage on Polymarket?
Yes — through PredMart. Open a leveraged position on the "No" token (up to 5x at any price) with a single signature; PredMart buys the shares and books them as collateral for you.
### What happens if the outcome I shorted ends up winning?
Your "No" shares settle at $0.00 and you lose your equity. Because PredMart is non-recourse, you never owe more than you put in — any shortfall on the borrowed amount is absorbed by the lending pool.
### What's the most I can lose shorting on Polymarket?
Your equity (the capital you contributed). Leverage can liquidate that equity well before resolution if the outcome you shorted rises past your liquidation price.
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## Next Steps
- [Leverage Trading on Polymarket](./leveraged-trading) — the full mechanics of opening leveraged positions
- [Liquidation](./liquidation) — exactly how and when positions are closed
- [Risk Parameters](./risk-parameters) — LTV, health factor, and borrow caps