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

All binary prediction markets operate with precisely two possible outcomes, each represented by YES and NO shares. Grasping the pricing mechanism 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 one minus the YES valuation.
• YES price + NO price = $1: These invariably aggregate to $1 (with minor variance for bid-ask spreads)

Illustration: "Shall inflation breach 3% during Q3 2026?" When YES trades at $0.40, participants collectively estimate a 40% likelihood of inflation surpassing 3%. NO consequently trades near $0.60 (reflecting a 60% expectation it remains lower).

How to Read Probability from Price

A YES share's market value directly corresponds to the collective 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 substantial upside potential alongside reduced winning odds. Favoured NO positions generate modest gains paired with elevated success probability.

Selling Before Resolution

Holding through final settlement remains optional. Should market conditions favour your position, liquidating shares prematurely allows you to realise gains ahead of resolution:

• Acquired YES at $0.30, market shifted to $0.55 → exit position at $0.55/share, capturing gains without awaiting conclusion
• Position deteriorating? Minimise losses through immediate sale at prevailing market rates

Multi-Outcome Markets

Markets presenting three or more possible outcomes (such as "Which candidate will secure the presidency in 2028?") assign a separate YES/NO pairing to each option. Purchasing YES on your preferred candidate means your shares return $1 each upon that candidate's victory.

FAQ

What happens to shares when a market resolves?

Successful shares instantly convert to $1 USDC per unit. Unsuccessful shares forfeit all value. Conversion occurs mechanically without participant intervention.

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

Absolutely — termed a hedge strategy. Participants frequently maintain both positions to mitigate volatility or capitalise on arbitrage discrepancies with assured returns.

What is the minimum share purchase?

PolyGram permits purchases commencing at $1 in value at the existing market rate. No floor exists on individual share quantity.