YES and NO Shares in Prediction Markets: Complete Guide
Every binary prediction market has exactly two outcomes, represented by YES and NO shares. Understanding how they're priced and how payouts work is the foundation of successful prediction market trading.
Basic Mechanics
- YES share: Pays $1 if the event occurs. Currently priced at the market's probability estimate.
- NO share: Pays $1 if the event does NOT occur. Always priced at 1 minus the YES price.
- YES price + NO price = $1: They always sum to $1 (approximately, accounting for spread)
Example: "Will inflation exceed 3% in Q3 2026?" If YES is priced at $0.40, the market implies a 40% probability of inflation exceeding 3%. NO is priced at approximately $0.60 (60% chance it stays below).
How to Read Probability from Price
The price of a YES share is the market's probability estimate:
- YES at $0.90 = 90% probability the event happens
- YES at $0.50 = 50% probability (coin flip)
- YES at $0.10 = 10% probability (long shot)
- YES at $0.01 = 1% probability (very unlikely but not impossible)
Calculating Your Returns
Your maximum payout is $1 per share, regardless of how much you paid:
- Buy 100 YES shares at $0.30 → cost $30 → if YES wins: receive $100 (profit: $70, return: 233%)
- Buy 100 NO shares at $0.70 → cost $70 → if NO wins: receive $100 (profit: $30, return: 43%)
Long-shot YES positions offer higher potential returns but lower probability. Favorite NO positions offer smaller returns with higher probability of winning.
Selling Before Resolution
You don't have to hold until market resolution. If the market moves in your favor, you can sell your shares early and lock in profit:
- Bought YES at $0.30, market moved to $0.55 → sell now for $0.55/share profit without waiting for resolution
- Position going against you? Cut losses by selling at current market price
Multi-Outcome Markets
For markets with more than two outcomes (like "Who will win the presidency in 2028?"), each candidate has their own YES/NO pair. You can buy YES on any candidate — if your candidate wins, your YES shares pay $1 each.
FAQ
- What happens to shares when a market resolves?
- Winning shares automatically receive $1 USDC each. Losing shares become worthless. Settlement is automatic — no action required.
- Can I hold both YES and NO shares in the same market?
- Yes — this is called a hedge position. Traders sometimes hold both sides to reduce variance or lock in a guaranteed return on arbitrage opportunities.
- What is the minimum share purchase?
- On PolyGram, you can buy as few shares as $1 worth at current price. There's no mandatory minimum number of shares.