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

Every wager placed in a prediction market boils down to a straightforward expected value assessment. Mastering this mathematical foundation ensures you approach each position with clarity — you'll understand precisely what success rate you require, at what odds, and what threshold determines profitability.

Basic Return Calculation

For a YES share acquired at price P:

• Win return: (1 - P) / P × 100% = your percentage profit if YES wins
• Loss: 100% of your stake if NO wins
• Break-even probability: P (the market price IS the break-even probability)

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 assessed probability stands at 55%:

• Win amount if YES: $150 (receive $250, paid $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. Establish your probability estimate BEFORE executing any trade
2. Determine the break-even probability (which equals the market price)
3. When your estimate exceeds break-even by more than the bid-ask spread: strong buy opportunity
4. When your estimate falls below break-even: evaluate NO shares as an alternative
5. When your estimate approximates break-even: pass — the edge isn't sufficient

Position Size Calculator

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

• For a position 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 cap at 5% per position rule

FAQ

Is there an automated calculator for prediction market trades?

Most prediction market platforms including PolyGram display projected fill prices, quantity of shares allocated, and final payout scenarios directly within the trading interface prior to order submission. Conducting your own EV analysis beforehand remains a valuable discipline.

How do spreads affect the return calculation?

Adjust your effective purchase price upward by incorporating half the spread width. If YES carries a bid of 0.38 and ask of 0.42, your realistic entry point is approximately 0.42 rather than 0.40.