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Mark-to-Market

Mark-to-market (MTM) is the process of revaluing an open prediction market position at current market prices to calculate unrealized profit or loss. It provides a real-time snapshot of what a position would be worth if closed immediately at the prevailing price.

Updated June 25, 2026Trading & Pricing
TL;DR
Mark-to-market tells you what your open position is worth right now if you closed it today. It converts paper gains and losses into a live dollar figure so you can manage risk.

Key Points

✓MTM value = position size multiplied by (current midpoint price minus entry price).
✓Unrealized MTM gains and losses fluctuate continuously as the market price moves; only closing the position locks them in.
✓Platforms display MTM PnL on portfolio dashboards so traders can monitor risk across multiple open contracts.
✓On regulated futures exchanges, mark-to-market settlement is daily and real cash moves to or from a margin account.
✓In prediction markets without margin, MTM is primarily an accounting tool rather than a cash settlement mechanism.

MTM in Prediction Market Portfolios

When you hold an open Position in a YES or NO contract on Kalshi or Polymarket, the value of that position changes every time the Market Price moves. Mark-to-market accounting captures this change in real time. If you bought 500 YES contracts at $0.50 and the current Midpoint Price is $0.65, your unrealized MTM gain is 500 contracts times $0.15, or $75. This figure appears in your portfolio dashboard as paper profit. If the market moves against you to $0.40, the same calculation shows an unrealized loss of $50. MTM valuations allow traders to assess total portfolio exposure and decide whether to hold, close, or hedge a position before Market Resolution forces a binary outcome.

Realized vs. Unrealized PnL

Mark-to-market produces unrealized profit and loss, which exists only on paper until you act. Realized PnL is locked in when you close a Position by selling your contracts or when the market resolves and Settlement pays out. Tracking both figures separately is important: a trader can show strong unrealized MTM gains but poor realized PnL if they routinely hold winning positions too long and give back gains before Market Expiry. Conversely, taking profits early books realized gains but potentially foregoes further upside. The Kelly Criterion and Bankroll Management frameworks help traders decide when realized PnL is large enough to justify closing versus continuing to hold an Open Interest position based on Expected Value of the remaining probability path.

Related Terms

Position
A position is the quantity of a prediction market contract a trader currently holds, either long (holding YES shares expecting the event to occur) or short (holding NO shares or having sold YES shares expecting the event not to occur). A position represents real financial exposure until it is closed or the market resolves.
Market Price
The market price of an event contract is the current prevailing price at which the contract is being quoted or traded, typically represented as the midpoint between the best bid and best ask on the order book. It reflects the crowd's real-time consensus probability for the event.
Settlement
Settlement is the financial process that follows market resolution, in which winning positions are credited their full payout value and losing positions expire worthless.
Expected Value
Expected value (EV) is the probability-weighted average outcome of a trade, calculated by multiplying each possible payout by its estimated probability and summing the results. A positive EV trade is one where the anticipated return exceeds the cost over the long run.
Open Interest
Open interest is the total number of event contract positions that are currently outstanding and have not yet been resolved, closed, or settled. Each unit of open interest represents one buyer and one seller who both still hold their positions.

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