Prediction market payout and expected value calculator
Separate the amount returned at settlement from the profit on a position. This calculator also shows expected value using your probability estimate, for a binary contract that pays $1 when the selected outcome wins.
Payout and expected value
What the position pays if it resolves your way, what it costs if it does not, and what it is worth on average at your own probability.
Expected value is per-trade, before fees and before the spread you actually get filled at.
How to use this calculator
- Enter the amount spent on the position, excluding fees.
- Enter the average price expected for that quantity.
- Enter your probability estimate and compare payout, profit and expected value.
Formula
- Contracts = stake / (price in cents / 100)
- Winning payout = contracts × $1
- Winning profit = winning payout − stake
- Expected value = p × winning profit − (1 − p) × stake
Worked example
A $100 stake at 40¢ buys 250 contracts in the model. A winning settlement pays $250, giving $150 profit; a losing settlement loses $100. If your estimated chance is 50%, expected value is 0.50 × $150 − 0.50 × $100 = $25 before fees.
Assumptions and limitations
The example assumes a standard $1/zero settlement, fractional quantities and a single entry price. It excludes fees, slippage, financing, taxes and special settlement outcomes. Positive expected value is not a promise of profit on one trade.
Common questions
Why is payout larger than profit?
Payout includes the value returned for your initial cost. Profit subtracts that cost from the payout.
Is expected value the amount I will receive?
No. It is a probability-weighted average of the model's outcomes. A single standard settlement produces the winning payout or zero, not the expected-value figure.
Examples are our arithmetic illustrations. Linked references explain the underlying market mechanics or model; they do not endorse a result or a trade.