What does Political Futures mean?
Futures contracts that trade on speculation of probability of specific outcome for a political event, such as the election results. The purchase price of the futures contract vary between $1 and $100 based on the probability at any given time of a successful outcome. If the success actually occurs, the investors receive $100, otherwise $0.
Futures Knowledge Explains Political Futures
Political features have become popular and are traded actively during important elections such as chances of winning of a particular candidate over another for President of the United States. The price of the political futures fluctuates widely till the results are out. It is a binary option where the payoff is either some fixed amount or nothing at all. And the payout comes after an election, based on the winning candidate. Investors pay a flat fee to purchase the future and will receive $100 if the candidate they chose wins, and $0 in the event of a loss. The price of the future fluctuates throughout the election, based on candidate support.