A June 2026 arXiv paper titled ?Do Prediction Markets Match Option Prices?? studies Bitcoin threshold contracts across Binance-compatible option pricing and Polymarket-style prediction markets. The author finds persistent pricing gaps between prediction-market Yes prices and probabilities implied by listed crypto options, with gaps that can mean-revert over time.
The trading lesson is not that every gap is a simple arbitrage. Prediction markets and options differ in venue access, collateral, fees, liquidity, settlement details, timing and trader base. A prediction-market price may include speculative demand, entertainment demand or balance constraints, while an option-implied probability comes from a different market microstructure and hedging flow.
Still, the comparison is useful. If a Bitcoin prediction market says an event is very likely while options imply a much lower probability, a trader can ask whether one venue is reacting slowly, whether liquidity is thin, or whether the contract definitions are not truly identical. The safest use is as a dashboard input beside implied volatility, skew, open interest, funding rates and spot liquidity.
Risk notice: Prediction markets and options both carry liquidity, settlement, regulatory and model risks. Apparent pricing gaps may disappear after fees, slippage and contract differences. This article is for education only, not investment advice.
Sources: arXiv paper: Do Prediction Markets Match Option Prices?; Binance Options overview; Polymarket public market site.
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