Event contracts are financial instruments that pay a fixed amount based on the yes-or-no outcome of a specific real-world event. Each contract has a defined question and an expiration date, at which point it settles for its full value if the outcome resolves as yes, or zero if it resolves as no. Markets exist across politics, economics, sports, weather, and cultural events, giving traders exposure to outcomes that traditional financial instruments do not price directly.
Event contracts trade on prediction markets, which are exchanges where the yes and no positions are quoted separately with prices moving between $0 and $1 as new information changes the perceived probability of each outcome. A contract priced at $0.60 for yes implies the market’s collective view that the yes outcome has a 60% probability. Traders can take either side, hold to expiration for the fixed settlement, or trade in and out as prices move.
Event contracts have become one of the fastest-growing asset classes in retail trading, driven partly by the accessibility of the product and partly by the range of markets available.
