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Event Contract

Trading Term

Usually a single proposition question posed to an investor on which there can be a single outcome. The investor can choose to buy a Yes version of the contract or a No version depending on their view. An example would involve the expected settlement price of a market index using a live futures contract. The event contract might pose the question: Will the price of the S&P 500 settle above 3,900 today? The outcome can either be yes or no. Event contracts face a fixed payout should the outcome be yes and have zero value with a no outcome. CME Group launched 10 live markets based on major futures contracts including energy, stock indexes, currencies and metals in September 2022. Live event contract prices are derived from the nearby futures contract and based on the probability of the outcome defined by proximity of price to the level posed by the question.

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