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

All binary prediction markets consist of precisely two possible outcomes, each represented by YES and NO shares. Grasping how these instruments are valued and what payoff structures look like represents the cornerstone of effective trading in prediction markets.

Basic Mechanics

• YES share: Delivers $1 upon the event materialising. Priced according to what the market currently believes is the likelihood.
• NO share: Delivers $1 should the event fail to materialise. Priced at one minus the YES valuation.
• YES price + NO price = $1: Combined, they invariably equal $1 (with minor variations for trading spreads)

Consider this scenario: "Will inflation surpass 3% during Q3 2026?" Should YES trade at $0.40, traders are collectively assessing a 40% likelihood of inflation breaching the 3% threshold. Conversely, NO would trade near $0.60, reflecting the 60% probability that inflation remains subdued.

How to Read Probability from Price

A YES share's price directly mirrors the market's collective 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 theoretically possible)

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 → expenditure $30 → should YES prevail: gain $100 (net profit: $70, percentage gain: 233%)
• Acquire 100 NO shares at $0.70 → expenditure $70 → should NO prevail: gain $100 (net profit: $30, percentage gain: 43%)

Underdog YES bets deliver outsized gains but face steeper odds. Favoured NO positions yield modest gains paired with stronger winning probabilities.

Selling Before Resolution

Holding until the market settles is unnecessary. Should conditions shift favourably, liquidate your holdings early and capture gains without awaiting final resolution:

• Purchased YES at $0.30, market rallies to $0.55 → exit position at $0.55/share, realising profit immediately
• Trade moving against expectations? Minimise losses by exiting at prevailing market rates

Multi-Outcome Markets

Markets encompassing multiple possible outcomes (such as "Which candidate will secure the presidency in 2028?") feature separate YES/NO pairs for each option. You may purchase YES on whichever candidate you favour — victory by that candidate triggers $1 per share settlement.

FAQ

What happens to shares when a market resolves?

Successful shares are credited with $1 USDC automatically. Unsuccessful shares forfeit all value. The process occurs without manual intervention.

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

Absolutely — termed a hedge strategy. Participants frequently employ this tactic to dampen volatility or capitalise on arbitrage discrepancies with assured returns.

What is the minimum share purchase?

PolyGram permits acquisitions beginning at $1 in value at the prevailing market rate. No floor exists on the quantity of shares required.