brsm1990,
The answer to your question is yes.
You can definitely create a smart reply that says “yes” and “no.”
To do that, take a look at the link below. Once you’re there, look at the steps in the first bullet from the section titled “Send a smart reply, Memoji sticker, sticker, GIF, or audio clip.”
Send messages from Apple Watch - Apple Support
The reason why we’re recommending the steps above is because the details we’re providing you will help move our troubleshooting efforts towards a resolution by helping to resolve the issue you initially reached out to the community about, which is creating a smart reply on your Apple Watch.
If the original problem persists after trying the previous steps, please provide us with specifics on what you see for more help, and we will continue from there.
Thanks for using the Apple Support Communities.
Cheers!