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

Every binary prediction market comprises precisely two 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 event occurrence. Quoted at the prevailing probability assessment.
• NO share: Delivers $1 should the event fail to occur. Consistently quoted at one minus the YES quotation.
• YES price + NO price = $1: The pair invariably totals $1 (with minor variance for bid-ask spreads)

Consider this scenario: "Will inflation surpass 3% during Q3 2026?" Suppose YES trades at $0.40; the market suggests a 40% likelihood of inflation breaching that threshold. NO consequently trades near $0.60, reflecting the 60% probability it remains lower.

How to Read Probability from Price

A YES share's quotation represents the market's implicit probability:

• YES at $0.90 = 90% likelihood the outcome materialises
• YES at $0.50 = 50% likelihood (equiprobable)
• YES at $0.10 = 10% likelihood (remote possibility)
• YES at $0.01 = 1% likelihood (improbable yet conceivable)

Calculating Your Returns

Each share yields a maximum settlement value of $1, irrespective of acquisition 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%)

Speculative YES positions deliver amplified upside potential but carry diminished win probability. Heavily favoured NO positions generate modest gains alongside elevated success likelihood.

Selling Before Resolution

Retention until final settlement remains optional. Should market conditions shift favourably, liquidate your holdings prematurely and realise gains:

• Purchased YES at $0.30, quotation climbs to $0.55 → exit position at $0.55/share, capturing profit without awaiting conclusion
• Trade deteriorating? Minimise losses by exiting at prevailing quotation

Multi-Outcome Markets

Markets encompassing multiple outcomes (such as "Which candidate will secure the presidency in 2028?") assign separate YES/NO pairs to each option. You may purchase YES on whichever candidate you favour — victory by that candidate triggers $1 redemption per share held.

FAQ

What happens to shares when a market resolves?

Successful shares instantaneously convert to $1 USDC each. Unsuccessful shares forfeit all value. Payout occurs mechanically — user intervention is unnecessary.

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

Absolutely — termed a hedge position. Participants occasionally maintain both sides to dampen volatility or capitalise on arbitrage inefficiencies across different platforms.

What is the minimum share purchase?

PolyGram permits purchases beginning at $1 in notional value at prevailing quotation. No floor exists on share quantity.