Cents = Probability
In prediction markets, prices are quoted in cents from 0¢ to 100¢. A contract trading at 72¢ means the market estimates a 72% probability the event will happen. This is the implied probability.
This works because the contract pays $1.00 if the event happens and $0 if it doesn't. So 72¢ is the fair price if you believe there's a 72% chance of winning $1.
Understanding Bid and Ask
Like stock markets, prediction markets have two prices:
Bid: The highest price someone is willing to pay to buy the contract. If you're selling, you'll receive the bid price.
Ask: The lowest price someone is willing to sell the contract for. If you're buying, you'll pay the ask price.
The spread (ask minus bid) represents the market maker's profit and the cost of trading. A 2¢ spread on a 50¢ contract means the bid is 49¢ and the ask is 51¢.
Converting to Decimal Odds
Decimal odds show your total return per dollar wagered. To convert: Decimal Odds = 1 / (Price in dollars)
A 40¢ contract = 1 / 0.40 = 2.50 decimal odds. This means a winning $1 bet returns $2.50 total ($1.50 profit + $1 stake).
Converting to Fractional Odds
Fractional odds show profit relative to stake: Fractional = (1 - Price) / Price
A 40¢ contract = 0.60 / 0.40 = 3/2 (or 1.5 to 1). You win $1.50 for every $1 wagered.
Fair Price vs. Market Price
The market price includes the bid-ask spread and fees. To find the fair price (true implied probability), use the midpoint: (Bid + Ask) / 2. Then subtract your estimated fees to find your break-even probability.
Practical Tips
Compare implied probabilities across platforms using PredRadar. When one platform shows 65% and another shows 70% for the same event, the difference might represent an arbitrage opportunity or simply different information being priced in.