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

Every wager placed in a prediction market boils down to a simple expected value computation. Master this framework and you'll never place a bet without clarity — you'll understand precisely what success rate you require, at what odds, and which threshold separates profit from loss.

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 YES priced at $0.40, and you assess the true probability 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 own probability estimate BEFORE examining the market
2. Determine the break-even probability (equivalent to the market price)
3. When your estimate exceeds break-even by more than the bid-ask spread: strong opportunity
4. When your estimate falls short of break-even: examine NO shares as an alternative
5. When your estimate aligns closely with break-even: pass — edge is insufficient

Position Size Calculator

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

• Assume your assessed p = 0.65 whilst the market quotes 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 — always respect the 5% per-trade ceiling

FAQ

Is there an automated calculator for prediction market trades?

PolyGram displays projected execution price, quantity of shares allocated, and terminal payout value within the order entry screen prior to submission. Performing independent EV analysis beforehand remains a prudent habit.

How do spreads affect the return calculation?

Revise your effective purchase price upward by half the spread width. If YES carries a bid of 0.38 and an ask of 0.42, your realistic entry cost approximates 0.42 rather than 0.40.