The Risks of only Buying 'NO' on Prediction Markets: 1) Most markets resolve to NO - A majority of Prediction Markets resolve to 'NO'. This is because most outcomes are unlikely and "Nothing Ever Happens" - Statistically, “NO” is the base-rate trade, like betting against rare outcomes 2) Analogy to covered calls / short volatility - Buying NO = taking the other side of event hype, similar to selling options - Like selling calls, you earn steady premium (market bias toward unlikely outcomes) - You’re effectively short volatility (on one side) -> benefiting when nothing extreme happens 3) Yield profile - Small, consistent returns when events fizzle out - Looks like free yield because most events never occur 4) Tail Risk - You consistently reinvest profits and Buy 'NO' on unlikely markets - Eventually an unlikely event occurs which completely blows you out and wipes out months of steady gains 5) Managing Risk - Don't overexpose yourself to a specific market. Spread out your bets. (e.g. no more than 5% of your total portfolio in one market) - Have an expected value calculation for each market so that you know when the trade might go against you - Only trade in markets where you have an edge