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A Futures Contract at Cenimar targets a specific class of data
(like the population of Europe), a future date and specific Source (like the CIA).
The value of the data at that future
date is initially unknown. The Source identifies whose
value is eventually going to be accepted as the correct answer.
(Identifying the Source is an important step since
different sources may come up with different estimates for the same data.)
A typical Contract has 7 Options - each of these Options offers
a different prediction of the data value at the target date. The Options
are always created (by Cenimar) in such a way that one Option must (eventually) be
correct while the others are wrong.
When Cenimar creates a new Contract there are no shares available.
Special users (called Market Makers) are allowed to purchase
Bundles of Options at I$10.00 per Bundle.
A Bundle consists of one Share of each Option in a Contract.
Traders who understand Limit orders can apply to become a
Market Maker.
When a Contract settles (i.e. when Shares are converted to I$) a Share of the
Option with the correct data value is worth I$10.00.
Other Options are worth nothing.
Note that this means that the net cost to Cenimar is zero since each
correct Share earns the same as the initial cost of a Bundle.
While the Contract is active, the Market Maker sells Shares of the
individual Options to other traders and those traders can also sell their
Shares to other traders (or back to the Market Maker).
When a buyer uses the Cenimar Prediction Market to buy a Share
from a seller, then the price that they agree on becomes the
value of the Share at that instant in time. So, you can
expect the value of a Share to vary between I$0.00 and I$10.00
as demand for the Option varies.
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