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

All binary prediction markets feature precisely two possible outcomes, each represented by YES and NO shares. Grasping how these shares are valued and what returns look like represents the cornerstone of effective prediction market trading.

Basic Mechanics

• YES share: Delivers $1 upon the event materialising. Valued according to the market's current probability assessment.
• NO share: Delivers $1 should the event fail to occur. Priced consistently at one minus the YES valuation.
• YES price + NO price = $1: These valuations consistently total $1 (with minor variations for bid-ask spread)

Consider this scenario: "Will inflation surpass 3% during Q3 2026?" Suppose YES trades at $0.40, signalling the market judges a 40% likelihood of inflation breaching 3%. Correspondingly, NO would trade near $0.60, reflecting the 60% chance it remains below that threshold.

How to Read Probability from Price

A YES share's price directly mirrors the market's probability assessment:

• YES at $0.90 = 90% likelihood the event materialises
• YES at $0.50 = 50% likelihood (equally balanced)
• YES at $0.10 = 10% likelihood (unlikely scenario)
• YES at $0.01 = 1% likelihood (improbable yet theoretically possible)

Calculating Your Returns

Each share yields a maximum payout of $1 upon resolution, irrespective of your entry price:

• 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 potential gains but face steeper odds. Favoured NO positions generate modest gains with substantially higher success probability.

Selling Before Resolution

Holding through market conclusion isn't mandatory. Should market sentiment shift favourably, you may exit early and realise your gains:

• Purchased YES at $0.30, price climbs to $0.55 → liquidate at $0.55/share, capturing profit instantly
• Trade moving against expectations? Minimise losses by exiting at prevailing market rates

Multi-Outcome Markets

Markets encompassing three or more possibilities (such as "Which candidate will secure the presidency in 2028?") allocate individual YES/NO pairs to each option. You may acquire YES on any selection — victory by your chosen option triggers $1 payoff per share held.

FAQ

What happens to shares when a market resolves?

Successful shares instantaneously convert to $1 USDC each. Unsuccessful shares forfeit all value. The process executes automatically without requiring participant intervention.

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

Absolutely — termed a hedge strategy. Market participants frequently maintain both positions to dampen volatility or capitalise on arbitrage inefficiencies with assured returns.

What is the minimum share purchase?

On PolyGram, purchases commence at $1 worth of shares at prevailing rates. No floor exists on the quantity of shares purchased.