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

All binary prediction markets contain precisely two possible outcomes, each represented by YES and NO shares. Grasping their pricing mechanics and settlement procedures forms the cornerstone of effective prediction market participation.

Basic Mechanics

• YES share: Delivers $1 upon the event materialising. Valued according to the market's current probability assessment.
• NO share: Delivers $1 should the event fail to occur. Priced consistently at one minus the YES valuation.
• YES price + NO price = $1: Combined, they invariably equal $1 (subject to minor spread variations)

Consider this scenario: "Will inflation surpass 3% during Q3 2026?" Should YES trade at $0.40, the market suggests a 40% likelihood of inflation exceeding 3%. NO consequently trades near $0.60 (indicating 60% odds it remains lower).

How to Read Probability from Price

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

• YES at $0.90 = 90% likelihood the event transpires
• YES at $0.50 = 50% likelihood (even odds)
• YES at $0.10 = 10% likelihood (unlikely scenario)
• YES at $0.01 = 1% likelihood (improbable yet conceivable)

Calculating Your Returns

Each share yields a maximum settlement value of $1, irrespective of purchase cost:

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

Underdog YES positions deliver superior profit potential alongside diminished win probability. Favoured NO positions provide modest gains paired with elevated likelihood of success.

Selling Before Resolution

Holding through market conclusion isn't mandatory. Should conditions favour your position, liquidate shares ahead of time and capture gains:

• Purchased YES at $0.30, price climbs to $0.55 → exit position at $0.55/share, realising profit immediately
• Trade moving unfavourably? Reduce exposure by exiting at prevailing market rates

Multi-Outcome Markets

Markets spanning multiple outcomes (such as "Which candidate will prevail in the 2028 presidential election?") allocate distinct YES/NO pairs to each option. You may purchase YES on any contender — should that contender succeed, your YES shares settle at $1 apiece.

FAQ

What happens to shares when a market resolves?

Successful shares automatically convert to $1 USDC each. Unsuccessful shares forfeit all value. The process executes autonomously—no participant intervention necessary.

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

Absolutely — termed a hedge strategy. Participants occasionally maintain both positions to minimise volatility exposure or capitalise on arbitrage pricing discrepancies.

What is the minimum share purchase?

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