Trading event contracts

This document is for informational purposes only and doesn’t constitute investment advice or a solicitation to trade. All trading involves risk and you could lose your entire investment. The products and platform discussed herein are offered by Crypto.com | Derivatives  North America, a CFTC-regulated exchange and clearinghouse. Please see below for further disclosures. 

What are event contracts? 

Event contracts are financial instruments that enable traders to speculate or hedge on the outcomes of real world events without owning any underlying assets. They operate as a prediction market, where users can buy and sell positions based on whether they think specific events will occur or not.

The core mechanism is straightforward; you buy contracts that potentially profit based on whether a predicted outcome materializes. 

For example, a contract might ask: ‘Will the Kansas City Chiefs win the 2026 Super Bowl?’

If you believe they will, you buy a ‘Yes’ position and if not, you buy a ‘No’ position. When the event concludes, correct positions typically pay $1 per contract, while losing positions expire worthless, with your profit or loss depending on the price you paid versus the final payout.

You can trade event contracts on our Predict platform.

Event contracts differ significantly from traditional derivatives like options or futures, which derive their value from the underlying financial assets such as stocks, commodities or currencies. Instead, event contracts derive value directly from the probability of specific occurrences, making them accessible to traders who want exposure to event outcomes without needing to own anything.

These contracts cover diverse categories including sports (for example, game winners or player statistics), politics (such as election results) and economics (inflation rates, employment figures, Federal Reserve rate decisions). You might also see contracts on entertainment, weather patterns and other measurable outcomes, as long as there is a single future event with a yes or no outcome attached to it.

Participating in event contracts can be straightforward , because you don't need to hold any underlying assets or manage margin requirements. You predict the likelihood of an event and trade accordingly. 

This accessibility has made event contracts popular, because traders use them to diversify their trading and to try to monetize their knowledge of specific domains in a way that is not possible with other products.

Importantly, the pricing mechanism reflects information discovery, as contract prices can gravitate toward the market's perceived probability of each outcome occurring.

Why trade event contracts? 

Event contracts can appeal to traders for many reasons, as they offer real world relevance – different from  traditional derivatives:

• Strategic potential – Event contracts are relatively straightforward and can be used for strategic portfolio management. They provide an accessible way to explore financial markets.
• Educational benefits – Event contracts offer hands-on experience with market dynamics, probability assessment and risk management. New traders can learn concepts including volatility and position sizing within a familiar context.
• Cost – With contracts available with us from as little as $1, trading can be done at a low cost. Traders can test their theories, develop intuition and gain market experience without any significant financial risk.
• Flexibility and liquidity – Positions can be opened and closed at any time before an event resolves, which means your funds aren’t locked in. This liquidity allows for dynamic risk management and profit-taking opportunities.
• Strategic applications – Traders can use event contracts for hedging or expressing macroeconomic views. For example, a portfolio manager might hedge election-sensitive holdings, or trade Federal Reserve rate decision contracts.

You can learn how to trade on Crypto.com.

How to trade event contracts on Crypto.com

Trading event contracts on Crypto.com through our Predict platform is relatively straightforward, as after regulatory required onboarding, the platform integrates prediction markets directly into our established cryptocurrency exchange. This lets you predict the outcome of events.

1. Sign up and access Predict

Begin by downloading the Crypto.com App from the Apple App Store or Google Play Store and creating a free account. You’ll need to provide your email, create a strong password and complete identity verification checks (KYC). 

This will involve providing a government issued ID (commonly a passport or driving licence), proof of address such as a bank statement and a selfie. Crypto.com prioritizes security with multi-factor authentication to protect your account.

Once your account is active, click on the main menu and locate ‘Predict’ in the drop down list. The feature may appear under trading tools, or as a separate section depending on the latest app update. All users must agree to additional terms and conditions in order to be approved for trading by CDNA.

2. Select your event

Our Predict platform allows you to trade many different categories of live and upcoming events including sports, politics and economics. Sports events typically include major leagues like the NFL, the NBA and Premier League games, covering outcomes like match winners point spreads and player performance metrics. 

Political markets might feature election results, policy decisions or approval ratings. Economic events often focus on Federal Reserve decisions, inflation releases or employment data. You can filter available event trades by category, and consider basic details like timing, current probabilities and trading volume.

3. Choose your contract

After selecting an event, you'll see available contract options representing the different possible outcomes. 

For a football game, for example, you might choose between ‘Green Bay Packers Win’ or ‘Kansas City Chiefs Win’. Each event will be clearly defined with specific terms and resolution criteria, ensuring there's no ambiguity about what constitutes a ‘Yes’ or a ‘No’ outcome. 

Each contract displays the current market price, which fluctuates based on trading activity and reflects the market's perceived probability of that outcome. 

4. Set your amount and place your trade

Type in your desired trade size and our platform will automatically calculate your potential profit  based on current market prices. For example, if you buy a ‘Yes’ contract at $0.65, you'll profit $0.35 if correct (assuming a $1 payout) minus fees. This is described s in depth below.

It’s important to review all trade details including the specific outcome, your trading amount, potential profit and total fees, before confirming. 

5. Track and manage your trade

Once you’ve executed your trade, you can monitor your position through Predict on the App, where you can view current market values and unrealized gains or losses. You can often manage your risk by exiting positions before the event’s resolution, by selling your contracts at current market prices, though this is not always possible.

6. Receive outcome and payout

After event resolution, winning contracts automatically pay out to your trading account, typically within a few hours of the official result. Payouts usually equal $1 per winning contract minus your original purchase price and fees. 

These funds appear in your trading account balance and can be withdrawn and used for additional trades.

Examples of event contracts 

Event contracts typically work like this: the outcome is either ‘Yes’ (the event happens) or ‘No’ (it doesn’t). 

Prices reflect the market’s collective view of the event’s likelihood. Typically, contracts are priced between $0.01 and $0.99, with the price representing the implied probability. For example, if a ‘Yes’ contract is priced at $0.70, the market believes there’s a 70% chance of the event occurring. In this case, the corresponding ‘No’ contract would trade at about $0.30.

These prices fluctuate in real time based on new information, trading activity and market sentiment. In general:

• Higher probability events cost more but return less.
• Lower probability events cost less but can generate higher profits.

Once you place a trade, you’ll see the cost, potential payout and your contracts will appear in your portfolio. After the event concludes, winning contracts pay $1 each, while losing contracts expire worthless.

Below are three practical examples of how this works in sports, politics and economics.

Sports example: Lakers Championship probabilities

Question: ‘Will the Lakers win the Championship?’

1. Let’s say it's December and this contract trades at $0.25, suggesting a 25% chance.
2. You predict that  their probabilities are better than 25% and buy 100 contracts for $25.
3. If the Lakers win, your contracts pay $100, leaving a $75 profit (less fees).
4. If they lose, you lose your $25 stake.
5. Alternatively, if the contract price is $0.40, you could sell early for a $15 gain, locking in profit before the final outcome.

Political example: Democrat Presidential Nominee

Question: ‘Will Gavin Newsom be the Democrat’s 2028 Presidential nominee?’

1. Two months before the nomination, the contract trades at $0.60 (60% implied probability).
2. You buy 50 contracts for $30, as you think polling underestimates Newsom’s support.
3. If Newsom wins, you receive $50, earning a $20 profit (less fees).
4. If Newsom loses, you lose your $30 stake.
5. If negative news breaks and the price falls to $0.35, you might sell for $17.50, cutting your loss to $12.50 instead of $30.

Economics example: Federal Reserve rate decision

Question: ‘Will the Federal Reserve raise interest rates at the next FOMC meeting?’

1. The contract trades at $0.80, showing strong market consensus for a rate hike.
2. You disagree and buy 200 ‘No’ contracts at $0.20 each, spending $40.
3. If the Fed holds rates steady, or cut, your ‘No’ contracts pay $200, giving you a $160 profit (less fees).
4. If the Fed raises rates, you lose your $40 stake.

How to get started trading event contracts with us

1. Download the Crypto.com App
2. Navigate to the Predict tab
3. Choose your first event contract
4. Trade with just $10 and see your outcome in real time

Benefits and risks of trading event contracts 

As with all trading products, event contracts come with their own set of advantages and drawbacks.

Benefits of event contracts

• Straightforward  – Event contracts are based on yes/no questions, This lets you focus on research and assessing probabilities.
• Low cost of entry – You can trade event contracts with us from just $1,This democratizes prediction markets. The low minimums also make it possible to diversify across multiple events without tying up significant funds.
• Real-time payout – Winning contracts typically settle within hours of the event outcome, giving traders immediate cash flow. Some traditional investments, which often take days to settle and allow profits to be reinvested or withdrawn right away.
• Flexible funding – Subject to terms and conditions.  We accept both fiat currency and cryptocurrency deposits, providing flexibility for users who prefer one over the other and making the markets more accessible. 

Risks of event contracts

• All-or-nothing outcome – Event contracts generally expire at either full value ($1) or worthless ($0). Unlike stocks, which can decline gradually, event contracts can result in a total loss if the prediction is wrong, making careful position sizing absolutely critical.
• Limited liquidity – Smaller or niche events may have from thin trading volumes, which can make it hard to exit a position at a favorable price. This illiquidity may leave traders in losing positions.

Important information: This content is for informational purposes only and does not constitute financial advice. Event Contract markets are volatile and carry risk. Please consult a financial adviser before making investment decisions.

Prediction is an event contract that is a derivatives product offered by Crypto.com | Derivatives North America (CDNA), a CFTC-regulated exchange. Trading on CDNA involves risk and may not be appropriate for all. By trading you risk losing your cost to enter any transaction, including fees. You should carefully consider whether trading on CDNA is appropriate for you in light of your investment experience and financial resources. Any trading decisions you make are solely your responsibility and at your own risk.