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

Every binary prediction market contains precisely two possible outcomes, each represented through YES and NO shares. Grasping how these instruments are valued and what settlement entails represents the cornerstone of effective prediction market participation.

Basic Mechanics

• YES share: Delivers $1 upon the event materialising. Priced according to the market's current probability assessment.
• NO share: Delivers $1 if the event fails to occur. Priced at one minus the YES valuation.
• YES price + NO price = $1: These two always aggregate to $1 (with minor variation for market spread)

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

How to Read Probability from Price

A YES share's price directly reflects what the market believes is the likelihood:

• YES at $0.90 = 90% likelihood the event materialises
• YES at $0.50 = 50% likelihood (even odds)
• YES at $0.10 = 10% likelihood (improbable outcome)
• YES at $0.01 = 1% likelihood (remote but theoretically possible)

Calculating Your Returns

Each share delivers a maximum settlement value of $1, independent of acquisition cost:

• Acquire 100 YES shares at $0.30 → total outlay $30 → upon YES resolution: collect $100 (net gain: $70, yield: 233%)
• Acquire 100 NO shares at $0.70 → total outlay $70 → upon NO resolution: collect $100 (net gain: $30, yield: 43%)

Underdog YES positions deliver outsized gains but carry lower win probability. Favoured NO positions yield modest gains paired with elevated success odds.

Selling Before Resolution

Market participants need not retain positions through final settlement. Should conditions shift favourably, you may liquidate holdings prematurely and realise gains:

• Purchased YES at $0.30, market rallies to $0.55 → exit immediately at $0.55/share, capturing profit without awaiting conclusion
• Trade deteriorating? Minimise damage by exiting at prevailing market valuation

Multi-Outcome Markets

Markets featuring three or more possible outcomes (such as "Which candidate will win the 2028 presidential election?") assign distinct YES/NO pairs to each contender. You may purchase YES on whichever candidate you favour — should that candidate prevail, your YES holdings settle at $1 apiece.

FAQ

What happens to shares when a market resolves?

Successful shares are automatically credited $1 USDC per unit. Unsuccessful shares expire worthless. The settlement process occurs without manual intervention required.

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

Absolutely — this approach is termed a hedge position. Market participants occasionally employ both sides simultaneously to diminish volatility or capitalise on arbitrage inefficiencies.

What is the minimum share purchase?

On PolyGram and comparable platforms, you may acquire shares worth as little as $1 at prevailing prices. No floor exists on the quantity of shares purchased.