Negative Expected Value (−EV)
Negative expected value describes a decision whose probability weighted expected return is lower than its cost under the assumptions being used. It is commonly shortened to −EV.
Why it matters to you
Imagine you estimate an outcome has an: 80% probability but the YES contract costs: $0.95 The event may still be very likely to happen. But under your own probability estimate, paying $0.95 for a $1 maximum settlement value would represent poor value. You can therefore be: correct about the outcome and wrong about the trade.
Terms that sit next to this one
Positive Expected Value
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