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

All binary prediction markets contain precisely two possible outcomes, each represented by YES and NO shares. Grasping their pricing mechanics and settlement procedures forms 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. Invariably priced at one minus the YES valuation.
• YES price + NO price = $1: These valuations consistently total $1 (subject to minor bid-ask spreads)

Consider this scenario: "Will inflation surpass 3% during Q3 2026?" Should YES trade at $0.40, participants are collectively estimating a 40% likelihood of inflation breaching the 3% threshold. NO consequently trades near $0.60, reflecting the 60% probability it remains subdued.

How to Read Probability from Price

A YES share's market quotation directly corresponds to the collective probability assessment:

• YES at $0.90 = 90% likelihood the outcome materialises
• YES at $0.50 = 50% likelihood (equiprobable scenario)
• YES at $0.10 = 10% likelihood (improbable but plausible)
• YES at $0.01 = 1% likelihood (remote possibility with non-zero chance)

Calculating Your Returns

The ceiling payout stands at $1 per share, 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 positions deliver outsized returns but face lengthier odds. Consensus NO positions yield modest gains paired with stronger resolution probabilities.

Selling Before Resolution

Holding until final settlement is optional. Should market sentiment shift favourably, early liquidation permits profit realisation without awaiting conclusion:

• Acquired YES at $0.30, quotation advances to $0.55 → exit position at $0.55/share, crystallising gains immediately
• Trade deteriorating? Mitigate drawdown by exiting at prevailing market rates

Multi-Outcome Markets

Markets encompassing multiple possibilities (such as "Which candidate will secure the presidency in 2028?") allocate separate YES/NO pairs to each option. Participants may purchase 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 automatically convert to $1 USDC per unit. Unsuccessful shares forfeit all value. Redemption occurs mechanically without participant intervention.

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

Absolutely — termed a hedge strategy. Participants occasionally maintain dual positions to suppress volatility or capitalise on mispricing arbitrage.

What is the minimum share purchase?

PolyGram permits acquisition commencing at $1 of notional value at existing quotations. No floor exists on share quantity.