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

Every wager placed in a prediction market rests on a fundamental expected value equation. Master this calculation and you'll never place a trade without clarity — you'll understand precisely what success rate you require, at what confidence threshold, and which odds justify your capital.

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 capital if NO resolves instead
• Break-even probability: P (the quoted market price doubles as your break-even threshold)

Worked examples:

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

Expected Value Formula

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

Suppose you deploy $100 on YES priced at $0.40, and you assess the true likelihood at 55%:

• Payout if YES: $150 (you collect $250 total, having staked $100)
• Payout 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 estimate BEFORE examining the market
2. Determine the break-even threshold (equivalent to the current market quotation)
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 — margin of safety insufficient

Position Size Calculator

Applying half-Kelly methodology: 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 — still observe the 5% per-position ceiling

FAQ

Is there an automated calculator for prediction market trades?

PolyGram displays projected execution price, quantity of shares, and final settlement value within the order confirmation screen prior to submission. Performing your own EV assessment beforehand remains a prudent analytical practice.

How do spreads affect the return calculation?

Modify your entry price upward by incorporating half the spread width. When YES carries a bid of 0.38 and ask of 0.42, your realistic entry sits nearer 0.42 rather than 0.40.