Event contracts allow traders to take a position on whether a specific event will happen or not. Instead of buying a traditional futures contract, traders simply choose “Yes” or “No” on a clearly defined outcome. Examples include whether an index will close above a certain level, whether a commodity will reach a target price, or whether a currency pair will hit a specific range.
These contracts have limited risk and a capped payout, making them accessible for newer traders and low-capital strategies. The maximum loss is the price paid for the contract, and the maximum gain is fixed, usually up to a set payout amount. Because of this structure, event contracts are transparent and easy to understand.
Event contracts are used for short-term speculation, hedging small exposures, or testing predictions without the complexity of full futures markets. They settle quickly—often daily—and are designed around straightforward, binary outcomes. Many regulated exchanges now offer event contracts to give traders a simpler way to participate in market expectations.
Event contracts give traders a low-cost, low-risk way to participate in markets. They provide clear outcomes, easy pricing, and quick settlement, making them useful for short-term strategies and market sentiment analysis.
Event contracts typically focus on price-based outcomes, such as whether an index closes above a certain level, whether crude oil rises to a target price, or whether gold hits a specific range by the end of trading. Exchanges choose events that are objective and easy to verify. Because the outcomes are based on end-of-day or settlement prices, there is no confusion about how the contract resolves.
Risk is naturally limited because the most a trader can lose is the cost of the contract itself. There are no margin calls, no leverage, and no risk of losing more than the initial amount paid. This makes event contracts easier to manage than traditional futures or options, while still offering exposure to market movements.
Event contracts are binary and have fixed payouts, while options and futures involve more complex pricing and potentially unlimited gains or losses. There is no need to manage strike prices, expiration strategies, or margin requirements. Event contracts settle to either a full payout or zero, making them simpler and more accessible for retail traders.
A trader buys a “Yes” event contract predicting that the S&P 500 will close above a certain level today. If the index closes above that level, the contract pays its full value. If not, the trader only loses the small amount paid upfront.
FinFeedAPI’s Prediction Market API provides structured event data and market outcomes, helping developers track probabilities, compare event results, and build tools that analyze event-based trading behavior.
