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

All binary prediction markets consist of 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. Valued according to the market's current probability assessment.
• NO share: Delivers $1 should the event fail to occur. Consistently valued at 1 minus the YES valuation.
• YES price + NO price = $1: Combined, they invariably equal $1 (roughly, considering bid-ask spreads)

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

How to Read Probability from Price

A YES share's valuation represents the market's implicit probability assessment:

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

Calculating Your Returns

Maximum settlement value stands at $1 per share, 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 returns but face steeper odds. Favoured NO positions yield modest gains paired with elevated success probabilities.

Selling Before Resolution

Holding through market conclusion remains optional. Should conditions favour your position, liquidating shares early captures gains without awaiting final settlement:

• Purchased YES at $0.30, price advances to $0.55 → exit immediately at $0.55/share, realising profit without resolution delay
• Position deteriorating? Exit at prevailing market rates to minimise losses

Multi-Outcome Markets

Markets featuring multiple outcomes (such as "Which candidate will win the 2028 presidency?") assign separate YES/NO pairs to each option. You may purchase YES on whichever candidate you favour — victory delivers $1 per share held.

FAQ

What happens to shares when a market resolves?

Successful shares automatically distribute $1 USDC apiece. Unsuccessful shares forfeit all value. Distribution occurs mechanically — participant action unnecessary.

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

Absolutely — termed a hedge approach. Participants frequently maintain both positions to minimise volatility exposure or capitalise on arbitrage inefficiencies.

What is the minimum share purchase?

On PolyGram, purchases commence at $1 worth of shares at prevailing rates. No floor exists on share quantity.