The Polymarket 99-cent strategy: small upside, concentrated downside.

The 99-cent strategy buys a prediction-market outcome trading near $1, usually between 98¢ and 99.5¢, when the trader believes the market is very likely to resolve in that outcome's favor. A winning share pays $1. The maximum gross profit is therefore the gap between the purchase price and $1; a losing share can be worth $0.

At 98¢, $98 buys 100 shares that may pay $100, a $2 gross profit. At 99¢, $99 may return $100, a $1 gross profit. Fees, slippage and capital locked during settlement reduce those figures.

If each successful 98¢ share earns 2¢ but one unsuccessful share loses 98¢, approximately 49 successful trades are needed to offset that one loss before fees. This asymmetric payoff is why a high implied probability is not enough. The resolution wording and the probability of a rare adverse outcome matter more than the size of each expected win.

Suppose a share costs $0.98 and is expected to pay $1 in seven days. The simple return is ($1 − $0.98) ÷ $0.98 = 2.0408%. Annualizing that simple return gives 2.0408% × (365 ÷ 7) ≈ 106.4%. That figure does not mean the trader will earn 106.4%, can reinvest at the same rate, or is likely to win. It only scales one hypothetical return to a one-year comparison period.

Use the APR calculator to include capital, fees and settlement delay.

• The event may occur differently than the market expects.
• The rules may use a source, cutoff or definition that differs from the headline.
• A disputed or clarified market can settle after the scheduled end time.
• Thin liquidity may prevent an exit near the displayed price.
• Fees and settlement delay can make an attractive headline APR ordinary or negative.

Arbitrage aims to combine positions whose payouts lock in a profit across all relevant outcomes. The 99-cent strategy normally buys only one outcome. If that outcome loses or resolves under an unexpected rule, the position loses. It is a directional, risk-bearing strategy, even when the market price implies very high probability.