You can do either, the first option will give you a smaller yo than wrapping it completely round the needles does, so it's really up to you. Does the pattern have a pic that goes along with it, how prominent are the yo's on the design?
If a little dreaming is dangerous, then the cure is not to dream less, but to dream more... to dream all the time! - Proust
currently recruiting for the war i am waging on time, there will be many casualties, but we will be victorious