Resolution risk and time-value calculator
A 95¢ contract is not a 5% trade. It is a 5% trade divided by however long you have to wait for it.
Prediction-market capital is locked until the market settles. That makes two costs invisible on the order book: the return you gave up by tying the money up, and the chance the market never resolves the way its wording implied. This prices both, and then tells you the probability you would need for the position to beat doing nothing.
below this and the money is better off doing nothing—
The near-certainty trap
Contracts priced at 90¢ and above look like free money and are the most common way patient traders lose slowly. The upside is capped at a few cents; the downside is the whole stake; and the money is gone until the oracle says otherwise. Stretch that over four months and the annualised number is often worse than leaving it alone — and that is before a single adverse resolution.
The void column is not hypothetical. Polymarket markets resolve through the UMA optimistic oracle: an outcome is proposed with a bond, there is a challenge window, and a disputed proposal goes into UMA’s dispute process rather than paying out. Most markets settle cleanly. The ones that do not are almost always the ones whose wording looked obvious from the outside.
The habit this is meant to break is simple: read the resolution criteria on the market page before you read the price. We put the criteria on every market page we publish for the same reason.
Questions
How do I annualise a prediction-market return?
Take the price p and the days to resolution d. The simple return if it lands is (1 - p) / p. Annualised, compounding, it is (1/p) ^ (365/d) - 1.
What is resolution risk?
The chance a market does not settle the way its wording implied — ambiguous criteria, a cancelled event, or a disputed proposal. It is a real cost and it is not in the price you see.
Why does locked capital matter?
Because the same money could be doing something else. A position held to resolution for four months has to beat four months of whatever your alternative was, not just beat zero.