What the calculation means
Implied probability expresses the probability embedded in a price or odds quote under the stated payoff model. It does not estimate the true probability of an event. Fees, spread, market margin and liquidity can change your economic break-even point.
The formulas
- $1 binary contract: probability = price in cents ÷ 100.
- Decimal odds: probability = 1 ÷ decimal odds.
- Positive American odds: probability = 100 ÷ (odds + 100).
- Negative American odds: probability = |odds| ÷ (|odds| + 100).
A worked example
A 60¢ contract with a $1 winning settlement implies 60% before costs. Buying 10 costs $6 before fees; a winning $10 settlement gives $4 profit before fees, while a losing settlement loses $6 plus fees. Decimal odds of 2.50 and American odds of +150 each imply 40%.
Boundaries and limitations
Contract inputs accept 0 and 100 cents as arithmetic boundaries, not a claim that those prices are tradable or certain. Decimal odds must exceed 1. American odds require an absolute value of at least 100. Results round to two decimal places for display. No fee schedule is applied.