What Is a Prediction Market?
A prediction market lets you bet on whether real-world events will happen — think "Will inflation hit 3% by December?" or "Will this bill pass Congress?" You're buying shares that pay out $1 if you're right, $0 if you're wrong.
Say a market asks "Will the Fed cut rates in September?" If YES shares cost $0.65, the crowd thinks there's a 65% chance it happens. You buy 100 shares for $65. If the Fed cuts, you collect $100 (your $65 back plus $35 profit). If they don't, you lose your $65.
How it's different from options: Options give you the right to buy/sell a stock at a set price — you're betting on where the stock price goes. Prediction markets bet on events that aren't tied to a ticker: elections, policy moves, even whether a celebrity gets indicted. The payout is fixed ($1 or $0), the odds move with the crowd, and there's no strike price or expiration Greeks to manage. You're trading information, not direction.