Profitable trade example
Based on current market conditions, an individual believes the price of gold will increase.
They see the current price of gold at $2,001, with an event contract based on whether the price of Gold futures will settle above $2,000 at 12:30 p.m. CT. Believing that it will close at a price above $2,000, they select “Yes.”
Based on the current market, the trade costs $51.00, which they will pay in full at the time of execution. If their view is correct, they will receive a $100.00 payout for a profit on the trade of $49.00.
At 12:30 p.m. CT, Gold futures settle at a price of $2,100. The trade is profitable and the individual’s account is credited $100.
The individual was able to participate in a market they find interesting, knowing their risk was limited to the $51.00 paid for the trade.
For more information, visit cmegroup.com/eventcontracts.
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