Understanding Event
Contracts
Learn how Aurra's offshore OTC event contracts provide sophisticated tools for trading on future outcomes and managing event-related risks.
What Are Event Contracts?
Event contracts are financial instruments that derive their value from the outcome of future events, providing a powerful tool for trading on event outcomes and hedging event-specific risks.
Binary Outcome Structure
Event contracts typically have binary outcomes (Yes/No), with prices reflecting the market's assessment of the probability of specific events occurring. This structure provides clear risk parameters and settlement conditions.
Risk Transfer Mechanism
These contracts enable the transfer of specific event risks between market participants, allowing entities to hedge against events that could impact their business operations, investments, or other financial interests.
Price Discovery Function
By aggregating market participants' views, event contracts provide valuable price discovery for event probabilities, offering insights that can inform business decisions and risk management strategies.
Offshore OTC Markets
Aurra operates as an offshore over-the-counter (OTC) platform, providing flexibility and access to sophisticated event contracts outside traditional regulatory constraints.
Direct Counterparty Trading
Trade directly with other sophisticated market participants, enabling customized contract terms and flexible settlement arrangements.
Enhanced Privacy
Offshore OTC structure provides enhanced privacy for trading activities while maintaining transparent market pricing.
Global Access
Access markets from anywhere in the world, with contracts denominated in USD for consistent valuation and settlement.
Sophisticated Tools
Advanced trading interfaces, real-time market data, and professional-grade analytics for informed decision-making.
Event Contract Example
Contract:
Will EUR/USD exceed 1.15 by Q3 2025?
Hedging Scenario:
A company with significant EUR exposure could purchase "NO" contracts to hedge against the risk of EUR/USD staying below 1.15.
Settlement:
Binary settlement at expiry: YES contracts settle at $100 or $0 based on the actual EUR/USD rate.
Risk Disclosure
Event contracts involve substantial risk and are not suitable for all investors. Past performance does not guarantee future results. Only trade with capital you can afford to lose.
How to Trade Event Contracts
1. Analyze the Event
Research the event, understand the factors that could influence the outcome, and form your view on the probability.
2. Assess Market Pricing
Compare your probability assessment with the market price to identify potential trading opportunities.
3. Execute Your Trade
Buy YES contracts if you think the event is more likely than the market price suggests, or NO contracts if less likely.
4. Manage Your Position
Monitor your positions, adjust based on new information, and decide whether to hold until settlement or exit early.
Professional Use Cases
Corporate Hedging
Hedge against regulatory changes, geopolitical events, or market movements that could impact your business operations.
Portfolio Management
Use event contracts to manage portfolio risk exposure to specific events or as an alternative investment strategy.
Speculative Trading
Leverage your insights and analysis to trade on event outcomes, with defined risk and transparent settlement.
Ready to Start Trading?
Join sophisticated traders worldwide who use Aurra's event contracts to manage risk and capitalize on market opportunities.