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 is essential to becoming a proficient prediction market participant.

Basic Mechanics

• YES share: Delivers $1 upon event occurrence. Valued according to the market's current probability assessment.
• NO share: Delivers $1 if the event fails to occur. Priced at the complement of the YES price.
• YES price + NO price = $1: These two always aggregate to $1 (with minor variations for bid-ask spreads)

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

How to Read Probability from Price

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

• YES at $0.90 = 90% likelihood the outcome materialises
• YES at $0.50 = 50% likelihood (even odds)
• YES at $0.10 = 10% likelihood (unlikely scenario)
• YES at $0.01 = 1% likelihood (remote but theoretically possible)

Calculating Your Returns

Each share yields a maximum settlement value of $1, 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 gains but face steeper odds. Favoured NO positions generate modest returns paired with elevated success probability.

Selling Before Resolution

Market participants need not retain positions through final settlement. Should market sentiment shift favourably, you may exit early and realise gains:

• Purchased YES at $0.30, price advances to $0.55 → liquidate immediately at $0.55/share, capturing profit without awaiting conclusion
• Position deteriorating? Minimise losses by exiting at prevailing market rates

Multi-Outcome Markets

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

FAQ

What happens to shares when a market resolves?

Successful shares instantly convert to $1 USDC per unit. Unsuccessful shares forfeit all value. The process executes automatically without participant intervention.

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

Absolutely — such arrangements constitute a hedged position. Participants occasionally employ this tactic to diminish volatility or capitalise on arbitrage inefficiencies by securing predetermined returns.

What is the minimum share purchase?

PolyGram permits acquisitions beginning at $1 in notional value at the prevailing market price. No threshold exists for minimum share quantity.