Polymarket IV Skew Spread
In plain terms
When prediction markets disagree with options markets on the same event, the cheaper side has the edge. We take the equity position implied by whichever instrument is mispriced lower.
How it works
Prediction-market YES probability vs equity-option-implied probability of the same binary event. When |P_polymarket − P_option_implied| > threshold and the equity has an options chain, take the cheaper-side equity position. Distinct from #206 polymarket_event_premium which compares against realized vol (0.5 baseline); this is the true Moonshot-C cross-instrument arb.
Live results
0 times picked on its own · 2 times inside a blend (2 beat the stock) · updated 2026-06-06Data dependencies
- Daily prices
Adjusted-close OHLCV for every US-listed ticker; primary price feed.
- Polymarket markets
A data feed this strategy reads, refreshed on its normal schedule.
- Polymarket prices daily
A data feed this strategy reads, refreshed on its normal schedule.
- Options chain daily
End-of-day OPRA option chains used by IV-skew family.
Expected edge
- Reported return
- untested — moonshot
- Tested over
- T+0 to T+63d post-spread
Untested — moonshot. Target ~100-300 bps annualized on tickers with both a linked polymarket and deep options chain (~50-100 names).
Example tickers where this is likely to fire
Illustrative only, the signal fires based on the live data, not a fixed list.
Related families
Prediction markets (Polymarket / Kalshi / Manifold) often price corporate events — FDA approvals, M&A close-by dates, CEO departures — faster than the stock does. When the prediction-market 'yes' price diverges from 0.5 by more than 5%, take a directional position in the linked equity.
Reads the option-chain 'smile' — when puts are unusually expensive vs calls, traders fear downside. v2 generator now uses the gauss314 HuggingFace bulk dataset, but coverage stops at 2023-07-28. Waiting on the IBKR paper-account forward fetcher to top-up post-2023 options chains for live signals.
Polymarket asks 'will the merger close on time?' — if YES is above 75% but the stock is still trading far below the deal price, take the long. Symmetric short when YES drops below 25%.
Explore Polymarket IV Skew Spread on alphactor.ai
See which tickers this family is currently firing on, with live signals and rankings.