context-research-mispricing-finder

name	context-research-mispricing-finder
description	Identify markets where the latest oracle quote diverges from the market price

Mispricing Finder

Find markets where the latest oracle quote diverges significantly from the market price — the primary signal for trading opportunities.

When to Use

The user wants to find markets where the oracle disagrees with the market, suggesting the price is wrong.

Steps

1. List active markets — context_list_markets({ status: "active", sortBy: "volume", limit: 20 }) to get liquid markets worth analyzing.

2. Get oracle evidence — context_get_oracle returns the oracle's evidence summary and confidence context.

3. Get the numeric oracle quote — there is no MCP tool for this yet. Use the SDK:

   • ctx.markets.latestOracleQuote(marketId) for the latest quote
   • ctx.markets.oracleQuotes(marketId) for quote history

4. Get the market price — context_get_quotes returns the current YES last/bid/ask.

5. Compare — calculate divergence: |latest_oracle_quote - yes_last_price|

   • < 5 cents — noise, oracle and market agree
   • 5–10 cents — monitor, possible developing opportunity
   • > 10 cents — significant, likely mispricing worth investigating

6. Simulate before acting — for divergences > 10c, call context_simulate_trade to check if the opportunity survives slippage at a realistic trade size.

   • If oracle says 70% but market trades at 55c, simulate buying YES at $50–$100
   • If slippage eats most of the edge, the opportunity isn't real at that size

7. Check the oracle's reasoning — the oracle response includes a summary of its evidence and confidence. If confidence is low or the reasoning seems stale, the divergence may not be actionable.

Gotchas

• Oracle updates lag the market. The oracle re-evaluates periodically, not on every trade. A divergence may exist because the oracle hasn't caught up to new information.
• Divergence direction matters. Oracle above market = market underpricing YES (buy opportunity). Oracle below market = market overpricing YES (sell opportunity, but selling requires SDK or CLI).
• Slippage kills small edges. A 10-cent divergence that costs 5 cents in slippage is only a 5-cent edge. Always simulate.
• Low-volume markets can have large divergences that are real but untradeable — not enough liquidity to capture the edge.
• MCP has no numeric oracle quote tool yet. Mispricing analysis that needs a hard probability requires the SDK today.
• Oracle confidence varies. Weight high-confidence estimates more heavily than low-confidence ones.

Verification

• Divergence calculation: confirm the latest oracle quote and market price are in the same units (both in cents / percentage points).
• Simulation: confirm the simulated fill price still preserves a meaningful edge after slippage.

See Also

• Oracle System — How the oracle works, quote vs market distinction
• Simulation — Interpreting slippage results
• Price Data — Quote structure, spread analysis