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Expected Value and Fees

Every trade in this market reduces to one comparison: your probability against the price, net of what the trade costs to do. This lesson makes that comparison precise.

Edge before costs

Buy a Yes contract at price cc with true probability pp and your expected profit per contract is simply

EV=p−c\text{EV} = p - c

Sell at cc (equivalently, buy No at 1−c1 - c) and it is c−pc - p. There is no curve, no discounting, no Greeks: a disagreement of three probability points is an expected three cents per contract. The entire question is whether those points survive the costs, and whether your pp deserves the confidence you are putting on it.

Fees tax uncertainty

Exchange fee schedules for event contracts are commonly built around the same quantity that governs a binary's variance. A representative structure charges, per contract,

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