PROBABILITY AND FAIR VALUE
What the price needs to pay
At −110, risk 110 to win 100. The break-even probability is 110 ÷ 210, or 52.38%. At +120, the same calculation is 100 ÷ 220, or 45.45%.
Compare both sides of the same line
When both sides are −110, their raw implied probabilities sum to 104.76%. Divide either side by that sum and the proportional no-vig estimate is 50%. This is a market benchmark and depends on the method and quote quality.
Test an adverse assumption
At −110, a hypothetical 55% cover probability gives a net expected return of 5.0% per unit before costs. At 51% the return is −2.6%. Estimate, uncertainty and authorization each answer a different question.