Two Prices for the Same Event: Crypto Options Versus Prediction Markets

Abstract

Prediction markets list contracts on whether a cryptocurrency will reach a stated price before a deadline. The options market prices the same event indirectly. We present a system that turns option prices into the probability that a price level is reached and sets it against prediction market prices. From March to October 2026 it made more than 4 million distinct comparisons on eight weekly and monthly markets. Over the period analyzed, the model predicted that 35.7% of the levels would be reached, 35.4% were, and market prices implied 42.9%. The book won 64.6% of its bets. The wider the gap we required between the market's price and the model's before betting against the market, the more the bets returned on the money at risk: 4% at a 2-cent gap, 11% at 3 cents and 28% at 5 cents. Adjusted for risk, the returns rose in the same order. Finally, we discuss where the research goes next.