Innovation in Futures Markets: Event Contracts, Speculation and Hedging

Fabio Mattos

No 413309, Cornhusker Economics from University of Nebraska-Lincoln, Department of Agricultural Economics

Abstract:

The CME Group has recently launched a new type of contract whose payoffs are based on specific events. These contracts are called event contracts but are also known as prediction contracts or information contracts. They are short-term contracts that expire at the end of each trading day. Traders can take positions in these contracts as they predict whether the price of a given asset will finish the trading day above or below a set value.

Discusses: How are they traded? Main characteristics of event contracts. Event contracts offered by CME group and event examples on October 21, 2022. Why were these contracts created? Why does the CME group want to have more people trading in its markets? Can event contracts be used for hedging?

Keywords: Financial; Economics (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:ags:nbaece:413309

DOI: 10.22004/ag.econ.413309

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