Prediction Market Returns Calculator: How Much Can You Make on Each Trade?

Every prediction market trade hinges on a fundamental expected value calculation. Mastering this framework ensures you approach each position with clarity — you'll understand precisely what win rate you require, at what confidence level, and the threshold for profitability.

Basic Return Calculation

When you acquire a YES share at price P:

• Win return: (1 - P) / P × 100% = your percentage gain should YES resolve affirmatively
• Loss: 100% of your capital at risk if NO resolves
• Break-even probability: P (the quoted market price equals your break-even threshold)

Worked examples:

• YES at $0.20: win = +400%, break-even = 20%
• YES at $0.50: win = +100%, break-even = 50%
• YES at $0.75: win = +33%, break-even = 75%
• YES at $0.90: win = +11%, break-even = 90%

Expected Value Formula

EV = (Your probability × Win amount) - ((1 - Your probability) × Stake)

Suppose you deploy $100 on YES at $0.40, with your conviction at 55% likelihood:

• Payout if YES resolves: $150 (you collect $250 total, having risked $100)
• Outcome if NO resolves: -$100
• EV = (0.55 × $150) - (0.45 × $100) = $82.50 - $45 = +$37.50 expected value

How to Use This in Practice

1. Document your probability assessment BEFORE entering any position
2. Determine break-even probability (which mirrors the market price)
3. If your assessment exceeds break-even beyond the bid-ask spread: compelling opportunity
4. If your assessment falls short of break-even: evaluate NO shares as an alternative
5. If your assessment aligns with break-even: pass — insufficient margin of safety

Position Size Calculator

Applying half-Kelly: f = 0.5 × (bp - q) / b

• For a scenario where your p = 0.65, market = 0.40: b = 1.5, q = 0.35
• Full Kelly: (1.5 × 0.65 - 0.35) / 1.5 = 0.42 (42% of total capital)
• Half Kelly: 21% of total capital — apply the practical 5% per-trade ceiling regardless

FAQ

Is there an automated calculator for prediction market trades?

PolyGram's trading interface displays projected entry price, share quantity, and terminal payout prior to execution. Running your own EV assessment beforehand remains a critical step in trade preparation.

How do spreads affect the return calculation?

Modify your effective entry price by incorporating half the spread width. If YES trades with bid=0.38, ask=0.42, your realistic entry sits around 0.42, not the midpoint of 0.40.