The price is also a probability

A price of 62c is not just a number; it is the market’s stated chance that the event resolves yes, and 1.00 minus it is the stated chance it does not. The two sides of the price - the bid and the ask - bracket that chance, and the gap between them is the first cost a trader pays, before any fee.

Desk spec

bid / ask: 60 / 62
mid: 61
spread: 2c
spread as share of mid: 3.3%

the contractA question turned into a tradable share. It pays a fixed amount on yes and nothing on no, and its price sits from 0c to 100c. On the samples it pays 1.00 and trades at 62c.

the priceThe market's implied chance of the event, so 62c is a 62.0% chance. The bid and the ask bracket it, and the 2c between them is the first cost a trader pays.

the settlementThe named source publishes the answer, and the payout follows. Of 200 sample contracts, 176 settled from the source and 4 were voided and refunded.

Direct answer

An event contract priced at 62c states a 62% chance: it pays 1.00 if yes, so the amount paid for it is the probability the market assigns. The bid is what a seller gets and the ask is what a buyer pays - 60c and 62c on the samples - and the 2c between them is the spread, 3.3% of the 61c mid, paid on every round trip.

The two sides of one price

There is no single price. There is a bid, which is the most anyone will pay now, and an ask, which is the least anyone will sell for now. A trade happens when the two meet. The mid is the halfway point, and it is a useful summary rather than a price anyone can trade at.

Sample B - the quote, and what each side means
Number	Value	Who gets it
the bid	60c	a seller who hits it, and the price a position is marked at to sell
the ask	62c	a buyer who lifts it, and the price a position costs to open
the spread	2c	neither side directly; it is the cost of crossing the gap
the mid	61c	neither side, unless an order fills there; a summary, not a price
spread as a share of mid	3.3%	paid on entry and again on exit

sample B - the spread in cents and as a share bid = 60c ask = 62c mid = (60 + 62) / 2 = 61c spread = 62 - 60 = 2c spread as a share of the mid = 2 / 61 = 3.3% buy at the ask and sell at the bid: paid = 62c received = 60c cost = 62 - 60 = 2c = 3.3% of mid so a position that moves nowhere still loses 2c a contract.

Why the price is a probability and not a value

The price tells a reader what the market thinks the chance is. It does not tell a reader whether buying is a good idea; that depends on the reader's own view of the true chance. If a reader believes the chance is 70% and the ask is 62c, the price is cheap by 8 points to that reader. The desk takes no view on which number is right; it only maps the price to the chance, so the comparison can be made at all.

sample A - the price as a chance, both directions price = 62c implied chance of yes = 62 / 100 = 62.0% implied chance of no = 100 - 62 = 38 -> 38.0% fair payout if the chance is right: expected value per contract = 0.62 x 1.00 = 0.62 paid = 0.62 -> net 0.00 before costs a reader who thinks the chance is 70%: expected value = 0.70 x 1.00 = 0.70 paid = 0.62 -> +0.08 of expected edge and the same 8 points, the other way, is the seller's case.

The bid, the ask and the mid are illustrative. A real book's spread widens when an event is thin, volatile or near its close, so the cost of sample B is the best case rather than the normal one. See the liquidity page for what a thin book does to an exit.

Reading a quote without being misled by it

Use the ask for what a buy costs and the bid for what a sell gets, never the mid.
Convert the price to a percentage before comparing it with your own view.
Remember that both sides of the price are guesses, and the market's guess can be wrong.
Add the spread and the fee before deciding the price is attractive.
Check that the bid exists at all, because on a thin contract it may not.

The price is also a probability

The two sides of one price

Why the price is a probability and not a value

Read next