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 understand precisely what win rate you require, at what odds, and the probability threshold needed to achieve profitability.

Basic Return Calculation

When you acquire a YES share at price P:

• Win return: (1 - P) / P × 100% = your percentage profit if YES wins
• Loss: 100% of your stake if NO wins
• Break-even probability: P (the market price IS the break-even probability)

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)

Consider a $100 position on YES priced at $0.40, where you estimate the true probability at 55%:

• Win amount if YES: $150 (receive $250, paid $100)
• Loss if NO: -$100
• EV = (0.55 × $150) - (0.45 × $100) = $82.50 - $45 = +$37.50 expected value

How to Use This in Practice

1. Before entering any position, establish your probability estimate FIRST
2. Determine the break-even probability (= market price)
3. If your estimate exceeds break-even by more than the spread: compelling buy opportunity
4. If your estimate falls below break-even: examine NO shares as an alternative
5. If your estimate aligns with break-even: pass — insufficient edge exists

Position Size Calculator

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

• For a position 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 bankroll)
• Half Kelly: 21% of bankroll — still cap at 5% per position rule

FAQ

Is there an automated calculator for prediction market trades?

PolyGram displays projected fill price, quantity of shares allocated, and maximum profit potential within the trade interface prior to execution. Independent EV analysis remains instrumental for evaluating opportunities before committing capital.

How do spreads affect the return calculation?

Modify the actual purchase price by incorporating half the spread width. If YES carries a bid=0.38, ask=0.42 quotation, your realistic entry point is approximately 0.42 rather than 0.40.