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The Outcome Market / Settlement
A named source, a deadline, and a rule for when neither answers
How an event contract settles
Settlement is where a question becomes a payout. One source is named to answer it, one deadline is set for that answer, and a rule covers the case where the source never answers at all. On the samples 176 of 200 contracts settled straight from the named source, and four were voided and refunded.
Desk spec
- contracts
- 200
- from the source
- 176
- void and refunded
- 4
- payout per contract
- 1.00
the contractA question turned into a tradable share. It pays a fixed amount on yes and nothing on no, and its price sits from 0c to 100c. On the samples it pays 1.00 and trades at 62c.
the priceThe market's implied chance of the event, so 62c is a 62.0% chance. The bid and the ask bracket it, and the 2c between them is the first cost a trader pays.
the settlementThe named source publishes the answer, and the payout follows. Of 200 sample contracts, 176 settled from the source and 4 were voided and refunded.
Direct answerAn event contract settles when the source named in its rules publishes the answer. On the samples 176 of 200 contracts settled straight from that source, 14 after a clarification, 6 resolved early and 4 were voided and refunded. A void returns the money paid and cancels the payoff; it does not pay a side.
The four ways a contract closes
Settlement is not one event but four possibilities, and only the first is the one readers picture. The other three exist because real events get clarified, finish early or fail to produce a result at all.
Sample D - how 200 contracts closed
| Route | Contracts | Share | What the holder receives |
|---|
| resolved from the named source | 176 | 88.0% | 1.00 if yes, 0.00 if no |
| resolved after a clarification | 14 | 7.0% | the same, from the corrected answer |
| resolved early | 6 | 3.0% | the outcome already fixed before the deadline |
| voided and refunded | 4 | 2.0% | the price paid back, 0.00 of payoff |
| total | 200 | 100% | a void pays neither side |
sample D - the four routes as shares
contracts = 200
from the source = 176 / 200 = 88.0%
after a clarification = 14 / 200 = 7.0%
resolved early = 6 / 200 = 3.0%
voided and refunded = 4 / 200 = 2.0%
not settled straight from the source = 200 - 176 = 24 -> 12.0%
so one contract in eight left the plain path,
and for four of them the outcome was neither side.
What a void actually does
A void is not a loss and not a win; it is an undo. The contract is cancelled and the price paid is returned, so the holder's net on that contract is zero before the spread and the fee already spent to acquire it. The important point is that a void refunds the price, not the payoff - a holder who expected 1.00 receives 0.62 on the sample rather than the 1.00 they were hoping for.
sample D - a void against the two real outcomes
one contract bought at = 0.62
if it had resolved yes = 1.00 -> net +0.38
if it had resolved no = 0.00 -> net -0.62
as a void and refunded = 0.62 -> net 0.00
so the void removes both the gain and the loss, and the
only cost left is the spread and the fee of samples B and C.
Settlement sources, deadlines and tie rules are set by the venue listing the contract and are not reproduced here. A reader should read them in the contract's own rules, because a clarification or a void is exactly the case where the wording decides the money.
Before holding a contract to settlement
- Know the exact source, and that it publishes the answer by the deadline.
- Know what a clarification does, and whether it re-opens or finalises the answer.
- Know the early-resolution rule, which can close a position before the date you expected.
- Know what a void refunds, because it is the price and not the payoff.
- Keep your own record of the fills and the settlement notice.
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