Event Contract Overview

What is an Event Contract and what is a prediction market?

An event contract is a financial contract that lets you trade on the outcome of a specific event, such as a Federal Reserve rate decision or a sporting event. These contracts trade in Prediction Markets and generally pay $1 per contract if your selected outcome is correct and $0 if it is not.

Under the rules of the Commodity Futures Trading Commission (CFTC), Event Contracts are classified as a type of swap because they consist of arrangements where two parties agree to exchange a contract for a future event. Each contract that you own will pay out $1 if that contract resolves in your favor. It will payout $0 if not.

What does buying Yes or No mean?

Buying “Yes” means you expect the event to happen. Buying “No” means you expect it not to happen.

For example, if you buy a Yes contract for $0.40:

• Yes outcome: You receive $1, earning $0.60 before fees.

• No outcome: You lose the $0.40 paid, plus fees.

How do Event Contracts differ from stocks, options, and traditional futures?

Event Contracts let you trade on a specific outcome without owning the underlying asset. They are paid for in full upfront and generally settle at $1 or $0, giving each purchase a defined maximum gain and loss.

Other investments work differently:

• Stocks represent ownership in a company and generally have no expiration date.

• Options expire, with payoffs that depend on the underlying asset’s price relative to a strike price.

• Traditional futures have leverage built into the contract which magnifies gains and losses.

Do Event Contracts use leverage?

No, Event contracts do not use leverage. To open a position you pay the full contract price plus any applicable fees, and you cannot borrow to buy contracts. Your maximum loss on a position is the amount you paid for it, and you cannot owe more than you invested.

What are the roles of Webull and the exchange?
Webull Futures LLC is a CFTC-registered futures commission merchant (FCM) and NFA Member. Webull provides your account, accepts your orders, and routes them to the applicable exchange. The exchange, a CFTC-designated contract market (DCM), lists the contracts, operates the marketplace where orders are matched, and establishes the rules governing trading and settlement.

What is Kalshi and how does it work with Webull?
KalshiEX LLC is a CFTC-designated contract market. Its affiliate, Kalshi Klear LLC, is a CFTC-registered derivatives clearing organization (DCO) that clears Kalshi-listed contracts. Webull provides customers access to eligible Kalshi-listed event contracts through the Webull platform, including account access, order routing, and customer support. Kalshi operates the exchange, and Kalshi Klear provides clearing services for the resulting trades.

What regulatory oversight and account protections apply to Event Contracts?
Event contracts offered through Webull Futures are subject to CFTC oversight under the Commodity Exchange Act and applicable CFTC regulations. Webull Futures is also subject to NFA oversight as an NFA Member. Event contract accounts are not protected by SIPC, which generally applies to securities accounts. Customer funds held by an FCM are subject to applicable CFTC customer-fund segregation requirements. Segregation is not insurance and does not protect against trading losses or guarantee against all losses.

What are the general risks of trading Event Contracts?

Trading event contracts is speculative and may not be suitable for all investors. If the outcome you traded on does not occur, the contract expires worthless and you lose the entire amount paid. Prices can change quickly as new information comes out, and some contracts may have limited liquidity. That can make it hard to exit a position at the price you want before expiration. Fees reduce your net return on each trade. Trade only with money you can afford to lose.