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 valuation mechanics and settlement procedures forms the cornerstone of effective prediction market participation.

Basic Mechanics

• YES share: Delivers $1 upon event occurrence. Traded at the market's current probability assessment.
• NO share: Delivers $1 if the event fails to materialise. Consistently valued at 1 minus the YES quotation.
• YES price + NO price = $1: Combined value invariably reaches $1 (subject to minor bid-ask spreads)

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

How to Read Probability from Price

A YES share's market quotation directly reflects the collective probability estimate:

• 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 odds)

Calculating Your Returns

Each share's terminal payout caps at $1, 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%)

Contrarian YES wagers deliver outsized potential gains paired with diminished success odds. Consensus NO positions yield modest profits alongside elevated win probabilities.

Selling Before Resolution

Market positions need not be retained through final settlement. Should market dynamics favour your holdings, liquidate early to crystallise gains:

• Entered YES at $0.30, quotation climbs to $0.55 → exit position at $0.55/share, realising profit without awaiting conclusion
• Trade moving unfavourably? Mitigate losses by exiting at prevailing market rates

Multi-Outcome Markets

Markets encompassing three or more possible outcomes (such as "Which candidate will secure the presidency in 2028?") allocate distinct YES/NO pairs to each option. Purchase YES on your preferred selection — upon that selection's victory, each YES share settles at $1.

FAQ

What happens to shares when a market resolves?

Successful shares automatically convert to $1 USDC per unit. Unsuccessful shares forfeit all value. The settlement mechanism operates autonomously without participant intervention.

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

Absolutely — termed a hedge position. Market participants frequently maintain simultaneous long and short exposure to minimise volatility or capitalise on regulatory arbitrage opportunities.

What is the minimum share purchase?

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