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 represents the cornerstone of effective prediction market participation.

Basic Mechanics

• YES share: Settles at $1 upon event occurrence. Its market value reflects the prevailing probability assessment.
• NO share: Settles at $1 if the event fails to occur. Its cost equals one minus the YES share valuation.
• YES price + NO price = $1: Combined valuation consistently totals $1 (subject to minimal bid-ask spreads)

Consider this scenario: "Will inflation surpass 3% during Q3 2026?" Should YES trade at $0.40, market participants are assigning a 40% likelihood to inflation exceeding the threshold. Conversely, NO trades near $0.60, representing the 60% probability that inflation remains subdued.

How to Read Probability from Price

A YES share's market price directly corresponds to the collective probability forecast:

• YES at $0.90 = 90% likelihood the event materialises
• YES at $0.50 = 50% likelihood (equiprobable outcome)
• YES at $0.10 = 10% likelihood (improbable but plausible)
• YES at $0.01 = 1% likelihood (remote 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 → expenditure $30 → upon YES resolution: obtain $100 (gain: $70, yield: 233%)
• Acquire 100 NO shares at $0.70 → expenditure $70 → upon NO resolution: obtain $100 (gain: $30, yield: 43%)

Contrarian YES positions deliver substantial upside potential alongside diminished success odds. Consensus NO positions provide modest gains paired with elevated winning probability.

Selling Before Resolution

Market participants retain the option to liquidate holdings prior to final determination. Should market sentiment shift favourably, you may exit and realise gains without awaiting conclusion:

• Purchased YES at $0.30, market repriced to $0.55 → liquidate immediately at $0.55/share, capturing profit ahead of settlement
• Thesis deteriorating? Mitigate losses by exiting at prevailing quotation

Multi-Outcome Markets

Markets encompassing multiple potential outcomes (such as "Which candidate will secure the presidency in 2028?") allocate separate YES/NO instruments to each option. You may acquire YES exposure on any contender — should your selection prevail, each YES share remits $1 upon settlement.

FAQ

What happens to shares when a market resolves?

Successful shares automatically credit $1 USDC per unit. Unsuccessful shares expire worthless. Disbursement occurs automatically without participant intervention required.

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

Absolutely — termed a hedge strategy. Participants frequently maintain simultaneous positions to dampen volatility or capitalise on regulatory arbitrage opportunities.

What is the minimum share purchase?

PolyGram permits acquisitions commencing at $1 notional value at prevailing quotation. No mandatory floor on share quantity applies.