Event contract
Updated November 10, 2026
An event contract is a CFTC-regulated derivative, usually a yes/no contract, that pays $1 if a defined future event occurs and $0 if it does not. The purchase price reflects traders’ collective expectation about the outcome.
Illustrative figures. You buy 10 yes contracts on “CPI above 3% in the next release” at 62¢ each. You pay $6.20 for the contracts, plus a $0.10 exchange fee and a $0.0217 commission. If CPI clears the threshold, each contract settles at $1.00: you receive $10.00 and keep $3.6783 net profit after fees. If the outcome is no, those contracts settle at $0.00 and you lose the $6.3217 you paid.
- Cost of 10 yes at 62¢
- $6.20
- Plus $0.1217 in fee and commission
- Paid out if CPI clears the threshold
- $10.00
- $3.6783 net profit after fees
- Paid out if the outcome is no
- $0.00
- You lose the $6.3217 you paid
Event contracts are the instrument prediction markets trade. They are structured as derivatives (often binary swaps). Outcomes are defined in contract rules, including the resolution source that determines the result.
Regulatory treatment of event contracts is evolving: rulemaking continues. What follows reflects the CFTC framework as of publication and may change.
Where event contracts trade
In the United States, event contracts are derivatives regulated by the Commodity Futures Trading Commission and trade on CFTC-regulated exchanges. Lumina's contracts are listed on ForecastEx, a CFTC-registered designated contract market. Lumina Markets Inc. is a CFTC-registered introducing broker and NFA member. Cash in your account is held at Interactive Brokers LLC in accounts subject to CFTC customer funds segregation requirements. Money in an open position is held as collateral at the ForecastEx clearinghouse.
On a regulated exchange the contract terms are standardized and the listing and resolution rules are published. When the resolution source publishes, the exchange applies the written criteria and settles every contract. Holders don't file a claim.
What the worked example costs with fees
Fees on Lumina are a $0.01 per-contract exchange fee, charged per side at execution, plus a 0.35% commission on trade value. On the ten contracts above:
- Total cost
- $6.3217
- $6.20, plus $0.10 exchange fee and $0.0217 commission
- Net profit if CPI clears the threshold
- $3.6783
- $10.00 paid out, minus the $6.3217
- Net loss if the outcome is no
- $6.3217
Statements and confirmations show these amounts rounded to the cent.
The fees apply to each trade. If you sell before settlement instead of holding, the closing trade carries its own exchange fee and commission. The payout calculator runs these numbers for any price and size.
How event contracts differ from options
Both are derivatives, but the payoff is shaped differently. An option's payoff varies with how far the underlying asset ends up from the strike price. An event contract pays a fixed $1 or $0, so its price reads as a probability of one defined outcome, and the most a buyer can lose is the price paid plus fees.
FAQ
How do event contracts work?
Each contract asks a yes-or-no question with a named resolution source. It trades between listing and resolution at a price that reads as the market's probability, and settles at $1 if the answer is yes and $0 if it is no.
Can you sell an event contract before it settles?
Yes, usually by buying the other side at the price available, which closes your position before the outcome is known. That needs free cash, a buyer at your price, and an open market: your account pays for the contracts the sale buys, and the $1.00 per pair comes back once the two positions net. The closing trade has its own fees.
What happens if an event can't be resolved?
The market's rules say what happens: a canceled election, for example, can resolve No. Where they don't, the exchange can settle early or delay settlement, paying at the contracts' most recent prices or a price it sets. That can be more or less than you paid.