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

All binary prediction markets comprise precisely two possible outcomes, each represented through YES and NO shares. Grasping their pricing mechanics and settlement procedures forms the cornerstone of effective trading in these markets.

Basic Mechanics

• YES share: Delivers $1 upon the event materialising. Reflects the current market-implied probability.
• NO share: Delivers $1 should the event fail to occur. Priced consistently at one minus the YES value.
• YES price + NO price = $1: These invariably aggregate to $1 (with minor variations for bid-ask spreads)

Consider this scenario: "Will inflation surpass 3% during Q3 2026?" When YES trades at $0.40, the market suggests a 40% likelihood of inflation exceeding 3%. Conversely, NO settles around $0.60 (reflecting 60% odds it remains lower).

How to Read Probability from Price

A YES share's price directly corresponds to the market's 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 (underdog scenario)
• YES at $0.01 = 1% likelihood (improbable yet 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 → outlay $30 → should YES prevail: collect $100 (gain: $70, yield: 233%)
• Acquire 100 NO shares at $0.70 → outlay $70 → should NO prevail: collect $100 (gain: $30, yield: 43%)

Underdog YES positions deliver outsized upside but carry slimmer win probabilities. Favoured NO positions provide modest returns paired with stronger likelihood of success.

Selling Before Resolution

Holding until final settlement isn't mandatory. When price movement favours your position, liquidate shares early and capture gains immediately:

• Purchased YES at $0.30, market rallies to $0.55 → exit at $0.55/share and realise profit ahead of resolution
• Trade deteriorating? Reduce exposure by selling at prevailing market rates

Multi-Outcome Markets

Markets spanning multiple outcomes (such as "Which candidate will claim the presidency in 2028?") assign distinct YES/NO pairs to each option. You may back YES on any contender — victory by your selection triggers $1 redemption per share held.

FAQ

What happens to shares when a market resolves?

Successful shares instantly convert to $1 USDC each. Unsuccessful shares forfeit all value. The process executes mechanically without user intervention.

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

Absolutely — termed a hedge position. Sophisticated traders frequently maintain both exposures to dampen volatility or capitalise on arbitrage spreads.

What is the minimum share purchase?

PolyGram permits acquisitions commencing at $1 in notional value at existing prices. No floor exists on share quantity.