By Matt Connor
How Event Contracts Settle: Payout and Fees
How event contracts settle: the dollar payout, full collateral, who resolves the outcome, and how a one cent fee shifts your breakeven at 90 cents.
Event contracts settle at exactly $1.00 or $0.00 per contract, with nothing in between. The winning side collects a dollar per contract, the losing side collects nothing, and the cash moves once, at resolution, out of collateral both sides posted up front. Our guide to what an event contract price implies covers the screen before then. This page starts at the deadline.
What happens when an event contract settles
An event contract is a yes or no claim on a stated question with a stated deadline. At the resolution time written into the contract specification, the venue reads the named resolution source, marks the outcome, and pays $1.00 per contract to the side that was right. Settlement is in cash, with no shares and no assignment to manage afterwards.
That payoff is narrower than an option's. When an option expires in the money, its value depends on how far past the strike the underlying finished, and it can turn into a stock position the next morning. An event contract has two endpoints and one step between them.
Two timestamps matter, and they are rarely the same. The event occurs, then the resolution source publishes. A contract on a monthly data release settles on the published figure at the published time, which can land well after the outcome is common knowledge. Listed options draw the same distinction between the moment and the print that counts: see AM and PM settled options.
Why a fully collateralized contract never gets a margin call
Both sides post the full dollar between them before the contract is live. Buy a yes at $0.62 and $0.62 leaves your account. The trader taking the other side posts the remaining $0.38. One dollar sits with the clearing organization until resolution, and one dollar is paid out. Nothing further is owed by either side.
Maximum loss is exactly what you paid, known to the cent before the order goes in, and the cap applies on both sides of the book: the trader who sold at $0.62 risks the $0.38 posted, never the whole dollar. No variation margin and no call for more collateral can arrive while the contract is open, since the full obligation was funded up front.
A short option position works the other way around. The premium arrives in the account, the exposure that follows is open ended, and the broker can revalue the margin behind it during the session. Sizing an event contract is one multiplication. Contracts times price paid equals every dollar at risk.
Who lists event contracts and who resolves them
In the United States, event contracts of this kind trade on a designated contract market (DCM), an exchange registered with the Commodity Futures Trading Commission (CFTC), and clear through a registered clearing organization. The venue publishes a rulebook, and each contract carries its own specification. Four items in that specification decide how it settles.
- The question, written as a testable claim with an explicit threshold.
- The resolution source, named as a specific publication or official result.
- The resolution time, the timestamp of the reading that counts.
- The fee schedule, quoted per contract.
Rulebooks also cover the awkward cases, and they differ by venue. When a named source is delayed or ambiguous, the rule text ranks what happens next: an alternative source, a waiting period, or a determination by the venue's settlement committee. When no reading can be applied at all, a contract can be voided and collateral returned to both sides. A revision published after settlement usually does not reopen a contract, since the reading at the resolution time is the one the rule points to. A rate decision contract names the policy announcement as its source, and how markets price Fed rate odds walks through that family of questions.
What a deadline does to a traded price
Event contracts trade on their own venues. The panels below read listed equity options instead, since the two instruments share one mechanic: a rule fixes what a contract is worth at a stated moment, and the traded price walks toward that value as the clock runs down. Intrinsic value here means what a contract would pay if it settled at that instant. The gap between the traded price and intrinsic value is the price of the time still left.
The exact SQL behind every number
SELECT
days_to_expiry,
round(avg(price), 2) AS avg_traded_price,
round(avg(payoff_now), 2) AS avg_intrinsic_value,
round(avg(abs(price - payoff_now)), 2) AS avg_gap
FROM
(
SELECT
days_to_expiry,
toFloat64(option_close) AS price,
greatest(
if(option_type IN ('call', 'C'),
toFloat64(underlying_close) - toFloat64(strike_price),
toFloat64(strike_price) - toFloat64(underlying_close)),
0.0) AS payoff_now
FROM global_markets.options_greeks
WHERE underlying_symbol = 'SPY'
AND date >= '2026-01-02'
AND date < '2026-07-01'
AND volume > 0
AND iv_converged = 1
AND days_to_expiry BETWEEN 0 AND 30
AND abs(toFloat64(strike_price) / toFloat64(underlying_close) - 1) < 0.02
)
GROUP BY days_to_expiry
ORDER BY days_to_expiryAcross the first half of 2026, SPY options with strikes within 2% of the fund's price carried an average gap of $10.18 at 30 days to expiry. At 1 days the gap measured $1.13, on an average traded price of $3.65 against $2.52 of intrinsic value. The two lines converge at the deadline. An event contract makes the same walk inside a one dollar range and finishes on one of the endpoints.
The next panel takes contracts in their final day and lines them up by where the strike sat against the underlying price. In the money (ITM) means the strike sits below the price for a call, giving the contract intrinsic value. Out of the money (OTM) means it has none.
The exact SQL behind every number
SELECT
multiIf(
bucket < 0, concat(toString(abs(round(100 * bucket, 1))), '% ITM'),
bucket = 0, 'at the money',
concat(toString(round(100 * bucket, 1)), '% OTM')) AS strike_vs_spot,
round(avg(price), 2) AS avg_traded_price,
round(avg(payoff_now), 2) AS avg_intrinsic_value
FROM
(
SELECT
floor((toFloat64(strike_price) / toFloat64(underlying_close) - 1) / 0.005) * 0.005 AS bucket,
toFloat64(option_close) AS price,
greatest(toFloat64(underlying_close) - toFloat64(strike_price), 0.0) AS payoff_now
FROM global_markets.options_greeks
WHERE underlying_symbol = 'SPY'
AND option_type IN ('call', 'C')
AND date >= '2026-01-02'
AND date < '2026-07-01'
AND volume > 0
AND iv_converged = 1
AND days_to_expiry <= 1
AND abs(toFloat64(strike_price) / toFloat64(underlying_close) - 1) <= 0.03
)
GROUP BY bucket
ORDER BY bucketThe 3% ITM bucket averaged $20.75 against $19.26 of intrinsic value. The 2.5% OTM bucket averaged $0.02 against $0. On the last day the traded price is mostly the payoff itself. An event contract's version of that picture is one step at the resolution threshold: one side pays $1.00, the other pays $0.00, with no slope in between.
Can you sell an event contract before it settles?
Holding to resolution is optional. The first exit is selling the contracts you hold back into the order book at whatever the market quotes. The position closes, the collateral is released, and the outcome stops mattering to you.
The second is buying the opposite side. Hold a yes bought at $0.62, buy a no at $0.30, and the pair pays exactly $1.00 whichever way the question resolves, locking the outcome at $1.00 against $0.92 paid. Venues that net offsetting positions release the collateral once the pair is formed. Venues that do not will carry both legs to resolution and tie up the cash until then.
Either exit needs a counterparty at that moment, and listed options show how uneven trading interest is across the life of a contract.
The exact SQL behind every number
SELECT
days_to_expiry,
round(sum(volume) / 1000000, 1) AS traded_volume_millions
FROM global_markets.options_greeks
WHERE underlying_symbol = 'SPY'
AND date >= '2026-01-02'
AND date < '2026-07-01'
AND volume > 0
AND iv_converged = 1
AND days_to_expiry BETWEEN 0 AND 30
GROUP BY days_to_expiry
ORDER BY days_to_expiryContracts with 1 days left traded 134.6 million contracts over the first half of 2026, against 4.6 million for contracts 30 days out. The deadline bucket is the heavier of the two. Event contract books work question by question, and the depth quoted around one question sets the exit price on it.
How a per contract fee moves your breakeven
Event contract fees are usually quoted per contract rather than as a percentage of the trade, which does something particular to the arithmetic. Take a contract bought at $0.90, with a hypothetical fee of one cent per contract charged when the order fills.
The all in cost is $0.91. A win pays $1.00, so the gross profit is $0.09 instead of $0.10. One cent added roughly 1% to the cost and removed a tenth of the upside.
The breakeven win rate makes it concrete. A binary contract breaks even, over many repetitions, at a win rate equal to its all in cost: 90% at $0.90, and 91% once the penny goes on. A flat one cent fee raises the required win rate by one percentage point at any entry price. One point at either price, though the cash differs by a factor of ten: $100 buys about 111 contracts at $0.90 and 1,000 contracts at $0.10, so the identical penny costs $1.11 of fees in the first case and $10.00 in the second.
Some schedules charge again at settlement on the winning side, which doubles the effect for a position held to the end. The numbers here are a worked example rather than any venue's schedule. The fee table in the contract specification is the one that applies.
How the panels were built
Every panel reads daily per contract records for listed SPY options between January and June 2026, restricted to rows where the contract traded and the daily model fit converged. Intrinsic value comes from the same row's strike and underlying close, so it is what that contract would have paid at that moment. Event contracts are absent from these panels: listed options stand in for the single mechanic the two share, a value fixed by rule at a stated deadline. The date window is pinned, so the figures hold still when the page is rebuilt.
FAQ
Do event contracts always settle at $1 or $0?
For a standard binary contract, yes: the winning side receives $1.00 per contract and the losing side receives nothing. Scalar contracts that pay a value inside a range exist on some venues, and their specification states the payoff formula.
Can you lose more than you paid for an event contract?
No. Both sides post their full share of the dollar before the contract is live, so a buyer's worst case is the price paid and a seller's worst case is the collateral posted. No obligation survives resolution.
What happens if an event contract is voided?
The venue's rulebook governs. A void generally unwinds the position and returns collateral to both sides, with fees handled per the published schedule. Voids apply when the named resolution source cannot produce a reading the rule can act on.
Can you sell an event contract before the event happens?
Yes, as long as a counterparty is quoting. You can sell the contracts you hold, or buy the opposite side, which locks the combined payoff at $1.00 per pair. Venues that net offsetting positions release the collateral when the pair is formed.
Who regulates event contracts in the United States?
Event contracts listed as commodity derivatives trade on exchanges designated by the CFTC and clear through registered clearing organizations. Each exchange publishes a rulebook plus a specification per contract, naming the resolution source and the settlement procedure.
Every panel on this page carries the SQL that produced it. To follow a contract's price into its own deadline, ask the question in plain English on the Strasmore terminal.