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

Every prediction market trade boils down to a straightforward expected value calculation. Mastering the underlying mathematics ensures you approach each position with clarity — you'll understand precisely what success rate you require, at what odds, and what threshold separates profit from loss.

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 is 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 (= market price)
3. If your estimate exceeds break-even by more than the spread: compelling buy opportunity
4. If your estimate falls below break-even: explore NO shares as an alternative
5. If your estimate aligns with break-even: pass — insufficient edge 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 — still cap at 5% per position rule

FAQ

Is there an automated calculator for prediction market trades?

PolyGram displays projected fill price, quantity of shares, and maximum payout directly in the trade confirmation screen before you commit. Independent EV analysis remains useful for assessing opportunities beforehand.

How do spreads affect the return calculation?

Adjust your effective purchase price upward by half the spread width. If YES carries a bid of 0.38 and ask of 0.42, your true entry point is approximately 0.42, not 0.40.