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

Every prediction market trade rests upon a fundamental expected value calculation. Grasping this mathematical foundation ensures you approach each position with clarity—you understand precisely what success rate you require, the threshold probability needed, and the odds necessary to achieve profitability.

Basic Return Calculation

For a YES share acquired at price P:

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

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)

For a $100 position on YES at $0.40, assuming your internal probability estimate stands at 55%:

• Win amount if YES: $150 (you receive $250 total, having invested $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. Prior to initiating any trade, document your probability assessment independently
2. Determine the break-even probability (equivalent to the market price)
3. Should your estimate exceed break-even by a margin larger than the bid-ask spread: this signals a compelling opportunity
4. Should your estimate fall below break-even: evaluate NO shares as an alternative
5. Should your estimate align closely with break-even: abstain—insufficient analytical advantage exists

Position Size Calculator

Using 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 bankroll)
• Half Kelly: 21% of bankroll — nonetheless observe the 5% per-position ceiling

FAQ

Is there an automated calculator for prediction market trades?

PolyGram displays projected settlement price, quantity of shares to be received, and terminal payout value within the trade confirmation screen prior to execution. Undertaking independent EV analysis beforehand remains a prudent analytical step.

How do spreads affect the return calculation?

Incorporate the spread into your effective purchase price by adding one-half the spread width. If YES carries a bid quotation of 0.38 and an ask quotation of 0.42, your realistic entry point approximates 0.42 rather than 0.40.