Prediction markets · Pro
Implied probability
What does Implied probability mean?
Implied probability interprets a contract price relative to its conditional payout as a market probability estimate. For a standard $1-or-zero binary payoff, a 60-cent price is commonly read as approximately 60%.
Example
A trader's own estimate is 65% while the contract trades at 60 cents, a five-cent expected payoff difference before costs under that estimate.
Illustrative example; not a provider’s quoted offer.Why it matters for prop traders
Fees, spread, liquidity and forecast error affect the trade. A displayed midpoint may not be an executable price and the market can be wrong.
Sources and further reading
The following primary sources support the terminology. Provider rules describe their own products and may change.