CobiaHow to Read a Prediction Market Price as Implied Probability
Short answer: A prediction market share trades between 1 and 99 cents and pays $1 if the event happens. The price in cents is the market's implied probability: 70 cents means about a 70% chance. The price is also your breakeven. You must win more often than the price implies to profit, so a 70 cent share needs to win more than 70 times in 100.
The basic contract
Every market has a Yes share and a No share. Each pays $1 if it is right and $0 if it is wrong. When you buy a Yes share at 40 cents, you pay 40 cents for a claim on $1. The market is saying the event has about a 40% chance. If it happens, you make 60 cents per share. If not, you lose the 40 cents.
Profit and loss per share
For a share bought at price p (written as a decimal):
- Profit if it wins: 1 - p.
- Loss if it loses: p.
At 0.70, you win 0.30 or lose 0.70. At 0.30, you win 0.70 or lose 0.30. Cheap shares win rarely and pay a lot. Expensive shares win often and pay a little.
Breakeven is the price
If a share costs 0.70, it breaks even when it wins 70% of the time. Win less and you lose money. Win more and you earn. This is why a team that wins 78% of the time is not a good buy at 78 cents: the price already contains the win rate. The edge is the gap between your true probability and the price, not the probability itself.
This is the main reason Cobia reports units and entry price beside every hit rate. See what a Main pick is for how we grade.
A worked example
Take 100 picks bought at an average of 73 cents, 1 unit staked on each. At that price a win earns about 0.37 units and a loss costs 1 unit.
- If 73 win, you earn about 27 units and lose 27. Breakeven.
- If 78 win, you earn about 29 units and lose 22, so you are up about 7.
- If 68 win, you earn about 25 units and lose 32, so you are down about 7.
A five point swing in hit rate changes the result by several units. That is why small samples tell you little. A few weeks of picks cannot separate skill from luck.
Bid, ask and spread
There are two prices on screen. The bid is what buyers offer, and the ask is what sellers want. You buy at the ask and sell at the bid. A market showing 54 bid and 58 ask has a four cent spread, a real cost of entering and leaving. The last traded price can sit anywhere in that range, so do not use it for sizing.
Prices do not add up exactly
Yes and No ask prices often add to slightly more than $1 because of the spread. The mid prices add to about $1. When the two asks add to a lot more than $1, the market is thin and the quote is less reliable.
What the price is not
- It is not a guarantee. A 90 cent share loses 1 time in 10.
- It is not a model output. It reflects what traders will pay now, and it moves on news.
- A win probability shown next to a pick is not a calibrated independent estimate. It sits close to the market price.
Long shots and the favorite bias
People often overpay for long shots. A share at 5 cents feels cheap, but it needs to win 5 times in 100 just to break even, and most traders cannot tell a 3% event from a 7% one. At the other end, shares at 95 cents risk 95 cents to win 5, so one surprise wipes out many small wins. Neither end is automatically a bad buy, but both deserve a check on whether the price matches what you honestly believe. A useful habit is to write down your own probability before you look at the price, then compare.
Next steps
To compare a Polymarket price with a sportsbook, read Polymarket vs sportsbook odds. To size a stake, see Kelly criterion bet sizing. For a start on the platform, see how to bet on Polymarket. Our graded picks are on the track record page.
Key takeaways
- Price in cents is the implied probability.
- Profit per share is 1 minus the price. Loss is the price.
- The price is your breakeven win rate.
- Use the ask when buying. The last trade can be stale.
- A high hit rate at a high price can still lose.
FAQ
What does a 70 cent price mean on a prediction market?
It means the market gives the event about a 70% chance. The share pays $1 if it happens, so you make 30 cents per share on a win and lose 70 cents on a loss.
How do I calculate breakeven?
The breakeven win rate equals the price. A share bought at 0.62 needs to win more than 62 times in 100.
Why is a high hit rate not enough?
Because the price already contains the win rate. A 78% hit rate at an average price of 78 cents earns nothing.
What is the spread?
The gap between the best bid and the best ask. It is a cost when you enter and exit a trade.
Is the price a prediction I can trust?
It is the market consensus and often a good guide, but it can be wrong, and thin markets can be moved by one order.
Cobia grades every pick in public, losers included.
Units at 1 unit per pick, with the entry price beside the hit rate.
See the track record