Strategy · Arbitrage
YES/NO SUM ARBITRAGE
NeutralDefined riskIntermediate
Overview
When the best Yes price plus the best No price sum to less than $1.00, buy both sides for a guaranteed profit at resolution. A pure-arb structure that occasionally appears on illiquid contracts.
Setup
- 1.Scan order books across contracts daily for Yes + No < $0.99.
- 2.Verify both sides have enough size at the quoted price for your intended position.
- 3.Buy Yes and No simultaneously, each in equal contract count.
- 4.Hold both sides until resolution — one pays $1.00, one pays $0.
- 5.Confirm net P&L = $1.00 − (Yes price + No price) per contract pair, minus fees.
- 6.Account for exchange fees in advance; fees often eat thin arbs.
Max profit
$1.00 minus combined entry price minus fees, per contract pair (typically 1-3 cents).
Max loss
Practically zero on a properly executed arb; only risk is exchange-side resolution dispute.
Breakeven
Combined entry price plus fees = $1.00.
When to use
On illiquid markets where one side gets mispriced after a news event before market makers reset quotes.
When to avoid
When the spread captured doesn't cover round-trip fees, or when the contract has resolution-criteria ambiguity.