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 processes forms the cornerstone of effective prediction market participation.

Basic Mechanics

• YES share: Delivers $1 upon the event materialising. Quoted at the market's current probability assessment.
• NO share: Delivers $1 should the event fail to occur. Consistently valued at one minus the YES quotation.
• YES price + NO price = $1: Combined, they invariably total $1 (with minor variance for bid-ask spread)

Consider this scenario: "Will inflation breach 3% during Q3 2026?" Should YES trade at $0.40, the market is signalling a 40% likelihood of inflation surpassing 3%. NO consequently trades near $0.60 (indicating a 60% chance it remains beneath that threshold).

How to Read Probability from Price

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

• YES at $0.90 = 90% likelihood the event transpires
• YES at $0.50 = 50% likelihood (even odds)
• YES at $0.10 = 10% likelihood (unlikely scenario)
• YES at $0.01 = 1% likelihood (improbable yet conceivable)

Calculating Your Returns

The ceiling for any payout stands at $1 per share, irrespective of your 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%)

Contrarian YES bets deliver outsized returns but face steeper odds. Backing favourites through NO shares yields modest gains paired with superior win probability.

Selling Before Resolution

Holding until final settlement isn't mandatory. Should market sentiment shift favourably, you may exit early and realise gains:

• Entered YES at $0.30, price climbs to $0.55 → liquidate immediately at $0.55/share, pocketing gains without awaiting conclusion
• Trade moving against expectations? Reduce exposure by selling at prevailing rates

Multi-Outcome Markets

Markets presenting three or more possibilities (such as "Which party will control the presidency in 2028?") assign distinct YES/NO pairs to each option. You may back any contender — victory by your selection triggers $1 payoff per YES share held.

FAQ

What happens to shares when a market resolves?

Successful shares instantaneously receive $1 USDC per unit. Unsuccessful shares forfeit all value. Disbursement occurs mechanically — no intervention needed.

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

Absolutely — termed a hedged position. Investors occasionally maintain both to dampen volatility or capitalise on arbitrage spreads by securing predetermined returns.

What is the minimum share purchase?

PolyGram permits acquisition of shares commencing at $1 in value at prevailing quotations. No floor exists on individual share quantities.