Contract
A contract is a tradable instrument in a prediction market representing a specific outcome under defined market rules, with a defined payout at settlement.
Definition
In prediction markets, a contract is a tradable instrument tied to a clearly defined outcome under specific market rules.
How it relates to price
Contracts often trade on a 0 to 1 or 0 to 100 cents scale, which is why the contract price is commonly interpreted as implied probability.
Why it matters for execution costs
Because the price range is bounded, microstructure costs like bid ask spread, slippage, and effective spread can materially affect profitability.
Common pitfalls
Ignoring rules: A contract’s payout depends on the market rules and settlement definition, not on intuition.
Mixing terminology: Some platforms say “contracts”, others say “shares”. The trading mechanics are similar, but naming differs.