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

Every wager placed in a prediction market hinges on a fundamental expected value assessment. Grasping the underlying mathematics ensures you approach each position with clarity — you'll understand precisely what success rate you require, what odds you're facing, and whether the numbers work in your favour.

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 initial outlay if NO resolves instead
• Break-even probability: P (the quoted market price doubles as 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 commit $100 to a YES position priced at $0.40, and you estimate the true probability at 55%:

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

How to Use This in Practice

1. Establish your probability assessment BEFORE examining the market price
2. Determine the break-even probability (equivalent to the market price)
3. When your estimate exceeds break-even beyond the bid-ask spread: compelling opportunity
4. When your estimate falls short of break-even: examine NO shares as an alternative
5. When your estimate aligns with break-even: pass — insufficient advantage exists

Position Size Calculator

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

• Consider 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 bankroll)
• Half Kelly: 21% of bankroll — nevertheless adhere to the 5% per-position ceiling

FAQ

Is there an automated calculator for prediction market trades?

PolyGram displays projected execution price, quantity of shares allocated, and maximum return directly within the order confirmation screen prior to submission. Independent EV computation remains beneficial for pre-execution due diligence.

How do spreads affect the return calculation?

Revise the effective entry price by incorporating half the spread width. When YES carries a bid of 0.38 and an ask of 0.42, your realistic entry sits around 0.42 rather than 0.40.