In prediction markets, odds are simple: the price of a contract is the market’s implied probability. A “Yes” share at $0.60 means the market thinks there’s a 60% chance that outcome happens. This guide explains how to read those prices, convert them to percentages, and use them to spot value.
Price Is Probability
In most prediction markets, each contract pays $1.00 if the outcome happens and $0.00 if it doesn’t.
So the price you pay is the market’s implied probability.
- Yes at $0.70 → market implies 70% chance the event happens.
- No at $0.30 → market implies 30% chance the event does not happen (so 70% it does).
No complicated formulas—the price in cents is the probability in percent.
How to Read a Market (Yes/No Prices)
Markets are usually binary: one “Yes” and one “No” side.
Example
“Will Bitcoin be above $100,000 by June 30?”
- Yes trading at $0.45
- No trading at $0.55
Interpretation: the market implies a 45% chance Bitcoin is above $100,000 by that date, and a 55% chance it isn’t. Yes + No should sum to about $1.00 (sometimes slightly less due to fees or spread).
What You See on the Screen
- Best bid: Highest price someone will pay (e.g. Buy Yes at $0.44).
- Best ask: Lowest price someone will sell at (e.g. Sell Yes at $0.46).
- Last traded: Most recent trade price.
- Spread: Difference between best bid and best ask. Tighter spread usually means more liquidity.
When you buy “Yes,” you typically pay the ask. When you sell “Yes,” you typically receive the bid.
Converting to Percentages and “Traditional” Odds
You already have the percentage: price in cents = implied probability in percent.
- $0.25 → 25%
- $0.50 → 50%
- $0.75 → 75%
If you’re used to sportsbook-style odds (e.g. +200, -150), you can convert:
- American odds (e.g. +200): Underdog. Implied probability ≈ 100 / (100 + 200) ≈ 33%. So prediction-market equivalent ≈ $0.33.
- American odds (e.g. -150): Favorite. Implied probability ≈ 150 / (100 + 150) ≈ 60%. So prediction-market equivalent ≈ $0.60.
In prediction markets you rarely need this—the price is the probability.
Why Odds Move
Odds change as new information arrives and as traders buy and sell.
- News: A poll, a speech, or a data release can shift views. Prices update in minutes or seconds.
- Order flow: Large buy orders can push the price up; large sell orders can push it down, especially in thin markets.
- Time: As the event gets closer, uncertainty often falls. Some markets get more volatile near the end; others stabilize.
So the same event can show 50% one day and 65% the next. That’s normal.
Odds vs Polls
Prediction market odds and polls both try to measure likelihood, but they work differently.
| Feature | Polls | Prediction market odds |
|---|---|---|
| Incentive | None | Money at risk |
| Update speed | Days or weeks | Real time |
| Who “votes” | Sampled respondents | Anyone willing to trade |
| Weighting | Often equal per respondent | By size of position |
Markets aggregate views of people who put money behind them. That doesn’t make them always right—but they often react faster and incorporate new information more quickly than a single poll.
How to Spot Value (Mispricing)
“Value” means you believe the true probability is different from the market price.
- You think the event is more likely than the price: Buy “Yes.” Example: market at $0.40, you think it’s 50%. You buy Yes and hope the price moves toward $0.50 or higher.
- You think the event is less likely than the price: Buy “No,” or sell “Yes” if you have a position. Example: market at $0.70, you think it’s 55%. You might buy No at $0.30.
You don’t need to be certain—you need a view that the price is wrong in your favor. Over time, being right more often than the market pays off.
Quick Check
Before trading, ask: “Do I think this outcome is more or less likely than the current price?” If you can’t answer, skip the trade or do more research.
How Payout and Profit Work
The math is straightforward.
- Cost: price per share × number of shares (e.g. $0.35 × 100 = $35).
- If correct: payout = $1.00 × number of shares (e.g. $100). Profit = payout − cost (e.g. $65).
- If wrong: payout = $0.00. Loss = cost (e.g. $35).
So your maximum loss is what you paid. Your maximum gain is ($1.00 − price) × shares.
| Price (Yes) | Cost for 100 shares | If correct (payout) | Profit |
|---|---|---|---|
| $0.25 | $25 | $100 | $75 |
| $0.50 | $50 | $100 | $50 |
| $0.75 | $75 | $100 | $25 |
The lower the price you pay (for a given outcome you believe in), the higher your profit if you’re right—and the higher the implied risk.
Quick Reference
- Price = probability: $0.60 = 60% implied chance.
- Yes + No ≈ $1.00 in binary markets.
- Profit if correct = ($1.00 − entry price) × shares; loss if wrong = entry price × shares.
- Value = when your estimated probability differs from the market price in a direction you can trade on.
Use this as your baseline. From here you can compare odds across platforms, read order books, and decide when to buy, sell, or sit out.