> ## Documentation Index
> Fetch the complete documentation index at: https://polymarketus.mintlify.site/llms.txt
> Use this file to discover all available pages before exploring further.

# Shorting

> Learn how shorting works and how margin and payoff are calculated

Shorting lets you take the opposite side of a market by **selling a Yes or No contract without owning it**. You receive the sale price immediately, and margin is locked to cover the maximum amount you can lose at settlement.

***

## What Margin Means

Margin is the amount locked to cover your **maximum possible loss** on a short position. Because every contract settles at **\$1** or **\$0**, the maximum loss is defined upfront.

* If you short Yes at \$0.60, your maximum loss is \$0.40.
* If you short No at \$0.30, your maximum loss is \$0.70.

**Margin equals your maximum possible loss.**

Margin is unlocked as you reduce the position and fully unlocked when you close it.

***

## Short Mechanics

When you short a contract:

* You receive the sale price as cash
* Margin is locked equal to your maximum possible loss
* Your payoff is determined by the fixed \$1 or \$0 settlement

**Example**: You short Yes at \$0.60.

<img src="https://mintcdn.com/polymarketus/URkEk1syzO0MxHJ6/images/advanced/shorting/short-mechanics.png?fit=max&auto=format&n=URkEk1syzO0MxHJ6&q=85&s=e540b0627d5053c480ef3ecf79ebff53" alt="Diagram showing $0.60 cash received and $0.40 margin locked" width="3200" height="700" data-path="images/advanced/shorting/short-mechanics.png" />

***

## Payoff Model

Shorting has a fixed payoff because every contract settles at **\$1** or **\$0**.

| Outcome  | Your Result |
| -------- | ----------- |
| Yes wins | -\$0.40     |
| No wins  | +\$0.60     |

* The **most you can gain** is the **sale price you received**
* The **most you can lose** is the **margin locked**
* Your **maximum possible loss** is determined **when you open the short** and only decreases when you reduce your exposure
* **Price changes** after shorting a contract have **no effect** on your margin locked

***

## Buying Power

After you short a contract, your buying power reflects the portion of your balance not locked as margin.

You can use it to reduce your short positions or margin, but not to open new positions.

***

## Reducing or Closing a Short

You can reduce or close a short at any time by buying back the shares you sold.

**Examples**

1. **Short 1 Yes, buy back at at a lower price**\
   Your exposure is closed.
2. **Short 10 Yes, buy back 4**\
   Your remaining exposure decreases, and some margin is unlocked.

***

## Shorting vs Buying the Opposite Side

Shorting Yes and buying No express the same directional view but use different cash-flow structures.

| Factor               | Shorting Yes at \$0.60 | Buying No at \$0.40 |
| -------------------- | ---------------------- | ------------------- |
| Cash flow            | Receive \$0.60         | Pay \$0.40          |
| Margin               | Required               | Not required        |
| Maximum loss         | \$0.40                 | \$0.40              |
| Maximum gain         | \$0.60                 | \$0.60              |
| Directional exposure | Wins if No wins        | Wins if No wins     |

Both positions have the same payoff because of the fixed \$1 or \$0 settlement.

***

## Why Shorting Exists

Shorting lets you express the same market view using different liquidity and pricing mechanics. In many markets, selling one side provides better depth, tighter spreads, or more favorable execution than buying the opposite side.