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

Every binary prediction market contains precisely two possible outcomes, each represented by YES and NO shares. Grasping their pricing mechanics and settlement procedures represents the cornerstone of effective prediction market participation.

Basic Mechanics

• YES share: Delivers $1 upon event occurrence. Its current value reflects the market's embedded probability assessment.
• NO share: Delivers $1 if the event fails to materialise. Its price equals one minus the YES share value.
• YES price + NO price = $1: These two always aggregate to $1 (with minor variance 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 that threshold. NO consequently trades near $0.60, representing the 60% probability it remains subdued.

How to Read Probability from Price

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

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

Calculating Your Returns

Each share caps at $1 upon settlement, 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%)

Contrarian YES bets deliver outsized upside but face steeper odds. Consensus NO positions yield modest gains paired with elevated success likelihood.

Selling Before Resolution

Market participants need not retain positions through final settlement. Should market dynamics 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 resolution
• Thesis deteriorating? Mitigate losses by exiting at prevailing market rates

Multi-Outcome Markets

Markets encompassing three or more outcomes (such as "Which candidate will claim the presidency in 2028?") allocate separate YES/NO pairs to each option. You may purchase YES on your preferred candidate — victory triggers $1 per share payout.

FAQ

What happens to shares when a market resolves?

Successful shares automatically receive $1 USDC each. Unsuccessful shares expire worthless. Settlement executes automatically — no participant intervention needed.

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

Absolutely — traders employ this dual-position strategy to dampen volatility or capitalise on arbitrage dislocations by securing predetermined returns.

What is the minimum share purchase?

PolyGram permits acquisitions beginning at $1 notional value at prevailing market rates. No floor exists on share quantity.