How prediction-market prices diverge from derivatives-implied probabilities

Prediction-market prices express what a venue's participants are willing to pay for event exposure. Derivatives-implied probabilities express what can be inferred from liquid instruments that react to the same underlying event. Those are related signals, but they are not the same market.

Divergence can appear when Polymarket liquidity is thin, when resolution language is narrower than a macro narrative, when derivatives move faster than event-market order books, or when participants face different funding and custody constraints.

A spread is not automatically an arbitrage. The fund has to normalize event definitions, data latency, liquidity, venue rules, hedge availability, and the probability model used to compare prices.

That is why Ultramar connects the thesis to signals and risk. The signal board explains what the fund is observing; risk controls explain how sizing, concentration, and model drift are controlled before allocation.

The commercial product is Polymarket-first. Lending markets and derivatives-only strategies remain research context until they have enough data quality, risk language, and allocator-facing controls to graduate.

That boundary matters for investor communication: Ultramar can be clear about Polymarket arbitrage without implying that every adjacent strategy is already live capital infrastructure.