How to read contract prices

The conversion is the identity function. A binary contract settles at $1 or $0, so a price of 68¢ implies a 68% chance, and the only reason to write it as a percentage rather than a price is that percentages read more naturally in a sentence. Venues quote between 1¢ and 99¢: neither 0 nor 100 is offered, because a contract quoted at either end is one whose outcome is already known.

Two other notations show up in the same conversation, both borrowed from betting. Decimal odds are 1 ÷ price — a 68¢ contract is 1.47, meaning a stake returns 1.47 times itself including the stake. American odds express the same thing as a ratio to $100: a 68¢ contract is −213, because you risk $213 to win $100. The table further down this page works the conversions out for the prices you actually meet.

Where the clean mapping breaks is fees. If a venue charges you to trade, then paying 68¢ plus a fee for something worth $1 is not a 68% break-even — it is slightly worse, and the size of the gap depends on how the schedule is written. The price tells you what the market thinks. Your break-even tells you what you need, and the two are not the same number.

An order book holds two queues: the highest price someone will pay (the bid) and the lowest price someone will accept (the ask). If the bid is 60¢ and the ask is 64¢, then buying immediately costs 64¢ and selling immediately gets 60¢. The midpoint, 62¢, is the number to read as the market’s probability — it is the only price that does not include the cost of being in a hurry.

That gap is not a fee in the accounting sense, but it spends like one. Buy at 64¢ and sell straight back at 60¢ and you are down 4¢ per contract, which is 6.25% of the 64¢ you paid — before any explicit fee at all. Crossing the spread once, which is what any market order does, costs roughly half of it relative to the midpoint.

A single number displayed as “the price” is usually either the midpoint or the last trade. The last trade is a historical fact, not an offer: on a quiet market it can sit inside, above or below the current book and tell you nothing about what you would get filled at right now.

A YES contract and a NO contract on the same event are mutually exclusive and cover every case, so holding one of each guarantees exactly $1 at settlement. If the two could be bought for less than $1 together, that would be free money, which is why on a functioning market they never can be.

What you see instead is the two asks adding to a little more than $1. YES at 64¢ and NO at 40¢ sum to 104¢, and that extra 4¢ is the market’s round-trip cost expressed as a single number — the same thing a bookmaker calls the overround. It is not evidence that the market is wrong; it is the price of transacting.

To read the probability, divide the excess out proportionally: 64 ÷ 104 = 61.5%. That is the convention this site uses everywhere it prints an implied probability, and it matters most exactly where it is least visible. On a market with a one-point spread the de-vigged number is indistinguishable from the raw YES. On a market with a twelve-point spread the difference between 64% and 61.5% is the difference between an honest comparison and an edge you invented by not dividing.

Spread width is a measure of disagreement about whether to trade at all. A one-point spread means two participants are standing a cent apart and either would deal. A twelve-point spread means the nearest buyer and the nearest seller are nowhere near each other, and the midpoint between them is an average of two refusals.

Our own tooling draws the line at eight points: above that, a quote is marked illiquid and excluded from any cross-platform price comparison, because the midpoint no longer represents a price anyone would transact at. That threshold is a judgement, not a law of nature, but the principle behind it is not — a number computed from a gap that wide is not a probability estimate.

Depth is the other half of the same question and is easier to forget, because it is not in the headline. A one-point spread with two contracts behind the ask is a tighter-looking market than a three-point spread with two hundred, and it is a much worse one to trade any real size into.