How settlement and payout work

Hold to settlement and the contract does exactly what it says. 147 contracts bought at 68¢ for $99.96 either become $147.00 — a profit of $47.04 — or become nothing, and the $99.96 is gone. There is no third outcome and no partial credit on a binary contract.

Sell before settlement and the position ends at a market price instead. This is a normal trade in the opposite direction: you are selling contracts to another participant at whatever the book will pay, which has nothing to do with what the contract eventually settles at.

Those two exits are worth keeping separate in your head because they carry different risks. Holding to settlement exposes you to the resolution — including the wording, the source and any dispute. Selling early exposes you to the book — whether there is a bid at all, and how far below the midpoint it sits.

Suppose you bought at 40¢ and the market is now bid 70¢. Selling locks in 30¢ per contract of profit and gives up the remaining 30¢ you would have made had you held to a YES settlement. It also removes all resolution risk: whatever the oracle or the exchange later decides, you are out.

That trade is priced by supply and demand at that moment, so it is subject to the same spread and depth arithmetic as the entry. A position that “should” be worth 70¢ can only be sold for whatever is actually bid, and on a thin market the best bid may be several points below the midpoint. Selling a large position walks down the bid side the same way buying walks up the ask side.

The corollary is that a paper gain is not a realised one, and the difference is not just sentiment. A large position in an illiquid market can be worth considerably less than the quoted price multiplied by the contract count, and that gap is only discovered by trying to exit.

Sometimes the criteria cannot be evaluated: the event is cancelled, the deadline passes without a determinable answer, the named source stops publishing, or the wording turns out not to cover what happened. What then occurs is set by the venue’s rulebook rather than by any universal rule.

The common outcomes are voiding the market and returning positions at the price paid, resolving it 50/50, or extending the resolution window. All three are survivable and all three mean the same thing for you: capital was committed for a period and came back without the result you were trading for. On a long-dated contract that is a real cost even when nominally nothing was lost.

Because the answer is venue-specific, this is one of the few genuinely important things to read in the rules before trading a market where an unresolvable outcome is plausible — a market on an event that might be postponed, or one whose resolution source is a single publication.

Three steps have to complete before settled funds are money you can use. The outcome has to be determined. The venue has to credit winning contracts to balances. And you have to be able to withdraw that balance.

The first two are separated by whatever process the venue uses — a challenge window on an oracle-resolved market, an internal determination on an exchange-resolved one. During that gap the market may be trading at 99¢ with the outcome effectively known, and your capital is still committed. That is the last cent of the price, and it is not noise.

The third step is a payments question rather than a contract one, and how long it takes differs by venue, by method and by jurisdiction. Those timings live on each platform’s review page rather than here, because they are exactly the kind of fact that changes without notice. What is worth planning around is that the sequence exists at all: “the market resolved” and “I have the money” are not the same event.