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Yarn over (yo) is basically a method that use in making holes or eyelets by bringing yarn over a needle and resulting in an extra stitch. This method is used mostly in lace knitting and in making eyelets for threading ribbons in baby knits and others.
Here is an example of yarn-over and K1 on the knit side. Although, you'll often see it with Knit 2 together in most of the patterns.
A lot of time you'll also see "yf" or "yarn forward" being use instead of "yo" on the knit side. Don't be confused, they're the same.
1. Bring the yarn forward, insert the right needle into the next stitch.
2. Bring the yarn over the needle to the back and wrap it around the right hand needle.
3. Bring the wrap yarn through the stitch.
4. Slip the knitted stitch off the left needle. Now you have it, a Yarn over on a knitted side.
1. Wrap the yarn around the right hand needle once. This counts as a yo stitch.
2. Insert the right hand needle purlwise into the next stitch.
3. Wrap the yarn around the right hand needle.
4. Bring the wrap yarn through the stitch.
5. Slip the working stitch off the left needle.
Now you'd just created a yarn over and a purl stitch on the purl side of knitting. Can you see a little space there?