YES and NO Shares in Prediction Markets: What They Mean and How to Trade Them

All binary prediction markets operate with precisely two possible outcomes, each represented by YES and NO shares. Grasping how these instruments are valued and what they return at settlement forms the cornerstone of effective prediction market participation.

Basic Mechanics

• YES share: Delivers $1 upon event occurrence. Priced according to the market's current probability assessment.
• NO share: Delivers $1 if the event fails to occur. Invariably priced at the inverse of the YES price.
• YES price + NO price = $1: These two always total $1 (with negligible variance for bid-ask spread)

Consider this scenario: "Will inflation surpass 3% during Q3 2026?" When YES trades at $0.40, traders are collectively estimating a 40% likelihood of inflation exceeding 3%. Conversely, NO trades near $0.60, reflecting the 60% chance inflation remains subdued.

How to Read Probability from Price

A YES share's price directly mirrors the market's probability assessment:

• YES at $0.90 = 90% likelihood the event materialises
• YES at $0.50 = 50% likelihood (evenly balanced)
• YES at $0.10 = 10% likelihood (improbable but feasible)
• YES at $0.01 = 1% likelihood (remote yet theoretically possible)

Calculating Your Returns

Each share yields a ceiling payout of $1 upon resolution, irrespective of acquisition cost:

• Acquire 100 YES shares at $0.30 → expenditure $30 → upon YES resolution: collect $100 (gain: $70, yield: 233%)
• Acquire 100 NO shares at $0.70 → expenditure $70 → upon NO resolution: collect $100 (gain: $30, yield: 43%)

Underdog YES positions deliver outsized upside but carry slim odds. Favoured NO positions generate modest returns paired with elevated win probability.

Selling Before Resolution

Holding through settlement isn't mandatory. Should market sentiment shift favourably, you may liquidate your position early and realise profits instantaneously:

• Purchased YES at $0.30, market reprices to $0.55 → exit immediately at $0.55/share, capturing gains without awaiting final outcome
• Position deteriorating? Mitigate damage by exiting at prevailing market rates

Multi-Outcome Markets

Markets encompassing three or more outcomes (such as "Which candidate will capture the presidency in 2028?") feature separate YES/NO pairs for each contender. You may purchase YES on any competitor — should your selection prevail, each YES share remits $1.

FAQ

What happens to shares when a market resolves?

Successful shares instantaneously credit $1 USDC per unit. Unsuccessful shares forfeit all value. Payout occurs mechanically without participant intervention required.

Can I hold both YES and NO shares in the same market?

Absolutely — termed a hedged position. Participants occasionally maintain both sides to dampen volatility or capitalise on arbitrage inefficiencies by securing predetermined returns.

What is the minimum share purchase?

PolyGram permits acquisitions commencing at $1 in notional value at the prevailing price. No floor exists on the absolute quantity of shares purchased.