What an event contract actually is
A contract is not a bet on a vague feeling; it is a question written down so precisely that a stranger could settle it. Five fields have to be fixed before it can trade: what exactly is being asked, who decides the answer, when the question closes, what a yes pays, and what happens if the question cannot be answered at all.
- fields
- 5
- price
- 62c
- payout on yes
- 1.00
- loss on no
- 0.62
An event contract is one question turned into a tradable share with five fixed fields: the exact question, the source that settles it, the time it closes, the amount a yes pays and the rule for a tie or a cancellation. On the samples it pays 1.00 on yes and 0.00 on no, and a contract missing any of the five fields cannot be priced, because its settlement is undefined.
The five fields, and what breaks without each
Four of the five are obvious once stated: the question, the source, the clock and the payout. The fifth is the one readers discover last, because it only matters when something goes wrong - the rule for a cancelled event, a change of date or a result that the source never publishes.
| Field | Value on the sample | What breaks without it |
|---|---|---|
| the question | a yes/no outcome, stated to exclude a tie | the two sides argue about what was asked |
| the source | one named publisher of the result | two sources disagree and neither governs |
| the clock | a close time and a resolution time | a position is held past the event or settled early |
| the payout | 1.00 on yes, 0.00 on no | the amount owed is unknowable at the price |
| the tie rule | void and refund, or resolve from a fallback source | a cancelled event leaves money trapped |
| five fields | all fixed in advance | a contract is a question, not a prediction |
Why a price needs all five
A price is an amount someone will pay now for a known payoff later. If the payoff depends on a question that is not pinned down, or on a source that is not named, the later payoff is not known, and the price is not a price - it is a guess about a guess. The five fields are what turn a hunch into something two strangers can trade.
- Read the exact question, including how it handles a tie, a draw or a no-result.
- Name the source that settles it, and check that the source publishes the answer at all.
- Find both clocks: when trading closes, and when the answer is due.
- Confirm the payout per contract, because it is not always 1.00.
- Read the tie rule and the cancellation rule, which is where the money goes when nothing resolves.