In “The Big Short” movie, two traders working out of their garage made 30 million dollars trading event contracts. What are event contracts, and how do you trade event contracts? If you want event contracts explained, this video is for you. This is the vest trading strategy that nobody knows about. The best trading strategy involves event contracts, also known as binary options trading. Binary options are useful in day trading as well as forex trading and swing trading. Event contracts are a very effective trading strategy for beginners that can generate huge profits with very little risk. Unlike live options trading, there is no theta decay, no volatility to worry about, and no complicated price ladders. Binary options are an effective FOREX strategy, scalping trading strategy, and day trading strategy used by thousands of traders all over the world. Event contracts can also be effective intraday trading strategies if you choose to close your contracts before they expire.
There is a trading strategy that has been used by large institutions and big banks for decades now, that has generated billions of dollars in profits, and yet you and I have been completely unable to use it until now. Four years ago, the CFTC, the Commodity Futures Trading Commission, approved this trading strategy for retail investors. And two years ago it launched and became available for regular people like you and I. This is the best trading strategy that nobody knows about, and I’m going to show you what it is and how to use it.
You might recall how in the 2015 movie The Big Short, there were two gentlemen working out of their garage running a $30 million investment fund. And the movie The Big Short explains how they made their money. They had started working out of Jamie’s garage with $110,000 Jamie had saved, taking sailboats up and down the East Coast. Our investment strategy was simple people hate to think about bad things happening, so they always underestimate their likelihood. The strategy was simple and brilliant. Jamie and Charlie found markets will sell options very cheaply on things they think will never happen. So when they were wrong, they were wrong small. But when they were right, they were right big.
How did they actually do that though? How did they place bets on things with very low chances of happening? Well, they used something called an event contract. I used event contracts when I worked at Merrill Lynch, as well as Morgan Stanley, and now regular guys like you and I can finally trade these. So what is an event contract? Event contracts allow an individual to trade based upon their view of the outcome of a particular event. To put it in its simplest terms, they allow someone to effectively bet on the likelihood of something happening. If the outcome you predict will occur does indeed occur, then you will return a profit. And trading event contracts could not be easier.
To trade an event contract, all you have to do is choose yes or no as to whether or not you think a particular event is going to occur. If you’re right, you’re going to generate a profit, and if you’re wrong, you’re going to lose your investment. Think about the movie The Big Short. How do they do it? Well, they place bets on events that a lot of people thought were very unlikely to occur. And, for example, they may have placed a $1 bet on an event that was unlikely to occur. And if the event does in fact occur, they get $100. Or maybe you expand that. You place $1,000, and if you’re right, you get $100,000. This is how they made their money, and now you and I can do the exact same thing.
Take the Fed rate cut, for example. Markets expect a rate cut soon, but central banks say not so fast. You may have heard that the markets are currently pricing in five rate cuts this year, while the Federal Reserve is currently predicting only three rate cuts this year. And that difference offers some opportunity to make money, if you’re right.
So how do you actually trade it? Well, it’s really simple. All you have to do is go to a broker that’s approved by the CFTC to allow the trading of event contracts for retail traders. The two brokers currently authorized by the CFTC to allow these contracts include Interactive Brokers and Kalshi. Now let’s take Kalshi for example, because they have way more contracts than Interactive Brokers does. And look at this top event here. The number of rate cuts this year. With that, you can place a bet based upon how many rate cuts you think the Federal Reserve is going to do this year. And if you’re right, you’ll generate a profit. You can also bet on other things, such as what will the Fed funds rate be in January? Will the Fed cut rates by March? What will the Fed do at their meeting in January? And other things.
Let’s take this one for example. Will the Fed cut rates by March of 2024? Well, currently the market is pricing in a 39% chance that the Fed will cut rates by March of 2024. So the way this event contract would work is, if you think, yes, the Fed will cut rates by March of 2024, you would place a bet. Now it would cost you $0.39 to place this bet. And if you’re right, you’re going to get $1. You could also place a “No” bet. If you place a “No” bet, it’s going to cost you $0.61 to place that bet. And if you’re right, you’re going to get $1. Of course, you can buy any number of contracts you want. Let’s say you bought 100 contracts. You would be betting $39 that yes, the Fed is going to cut rates by March. And if you’re right, you’re going to get $100 in profit. If you’re wrong, you’re going to lose your $39. Or you bet that the Fed is not going to cut rates by March. Let’s say you bought 100 of those contracts. You would place $61 on that, betting the Fed would not cut rates by the end of March. If you’re right, you’re going to get $100. If you’re wrong, you’re going to lose your $61.
Now, where does the money come from if you’re right or wrong? Well, think about the math there. If you’re right, and yes, the Fed does cut rates, it’s $39. If you say no, the Fed is not going to cut rates, that costs $61. And if you look at the difference there, 61 plus 39 equals 100. So basically if you bet “Yes” and you’re right, your profits are going to come from everybody who bet “No”. And if you bet “No” and you’re right, your profits are going to come from everybody who bet “Yes”. So it’s a very, very simple way to trade events and make money.
Let’s look at another event contract as another example. What will the Fed do at their meeting in January? Well, traders are currently pricing in a 97% chance the Fed is going to keep rates the same, a 5% chance they’re going to hike by at least 25 basis points, and a 1% chance that they’re going to cut by at least 25 basis points. And here you can see the probabilities and how much each one of those would cost. Now if you notice on here, cut 25 basis points. I bought an event contract saying no, the Fed is not going to cut by 25 basis points. That’s currently valued at $0.99. Meaning if I’m right, I’m only going to make one penny. But hey, that’s still a 1% profit in two weeks, or 24% profit in a year. And that definitely beats the overall stock market on average.
There are other types of event contracts you can trade on too, such as what will US GDP be, what will the job numbers be, what will CPI be, what will inflation be? And even individual categories such as gas, used cars, apparel, shelter, etc. Of course, you can trade event contracts on the overall market such as the S&P 500, the Nasdaq, WTI oil, and FOREX such as the Euro, the Japanese Yen, and others. And financial contracts are available on Interactive Brokers as well as Kalshi. All of the other event contracts are only available on Kalshi. And if you’ve ever wanted to trade the Treasury bond yields without actually buying and selling treasuries themselves, you can do that on here as well.
But probably the coolest part of all about trading event contracts, is that you can trade individual company events. For example, will Apple Watch sales be banned at the end of January? What will Tesla deliveries be in Q1? Will a Neuralink be implanted into living humans before the end of the year? Will Apple reveal a foldable iPhone this year? Will SpaceX Starship launch before a particular date? That’s right. You can trade events on private companies as well as public companies, and this is where you can make a lot of money. Let’s take this SpaceX Starship launch, for example. Here you have the particular probabilities of whether the SpaceX will launch a Starship before a particular date. Now look at this February 1st date as an example.
Will SpaceX launch their Starship before February 1st? It costs $0.04 to bet “Yes”, and $0.99 to bet “No”. Now, remember, these contracts will pay out $1 if you’re correct. So if you bet no, you’ve got to put down $0.99 to make $1. Now what if they did in fact launch a starship before February 1st? You could bet “Yes”. Let’s say you had some sort of insider knowledge. You knew what was going to happen. You could come in here, you could put $0.04 on “Yes”, and if you’re right, you’re going to get $1. Or maybe you do 100 contracts, you put $4 down and if you’re right, you make $100. Or maybe you do 1,000 contracts, you put $40 down, and if you’re right, you make $1,000.
Now that’s all speculation, but let me give you one that I think is a slam dunk. Look at this event contract. Will the Boeing 737 Max 9 be un-grounded this year? That is, will it be un-grounded by the end of 2024? Currently, traders are pricing in an 86% chance that yes, it will be un-grounded by the end of the year. So if you were going to bet that, yes, it would be un-grounded by the end of the year, it would cost you $0.89. If you bet, no, it will not be un-grounded by the end of the year, it’s only going to cost you $0.15. So check this out. $0.15, no, it will not be un-grounded by the end of the year, in order to make $1, or $15 to make $100, or $150 to make $1,000, just depending upon how many contracts you decided to buy.
Now, why am I focusing so much on “No”, the planes will not be ungrounded before the end of the year? Well, we have some history to look at here. The last time two Max 8 planes crashed, the Max 8 and Max 9 planes were grounded worldwide for nearly two years. So the last time that the Max 8 and Max 9 planes were grounded, they were grounded for two years. It’s only going to cost you $0.15 to bet that the Max 9 planes will remain grounded for more than one year, and if you’re right, you’re going to get $1. Or you bet $15 to make $100, or $150 to make $1,000. And here’s the thing. This is the kind of event that those traders did in The Big Short. They would do events that a lot of people thought were unlikely to happen, and yet they were right and they made a ton of money. This is probably the best trade out there right now as far as event contracts are concerned, in my humble opinion. This is not financial advice. I’m not telling you to go place this trade. I’m just telling you what I would do. I would go in, I would place a bet that, no, the Max 9 planes are not going to get un-grounded before the end of the year. Might throw $150 on there, and if I’m right, I’m going to make a thousand bucks.
Now, you’ve probably heard of Interactive Brokers before, but you may not have heard of Kalshi since they’re kind of brand new. Back in November of 2020, about three years ago, the Commodity Futures Trading Commission announced that it has issued an order of designation to Kalshi, granting its status as a designated contract market. In other words, Kalshi is licensed by the CFTC to provide these event contracts. And the CFTC is kind of a big deal. The CFTC, or Commodity Futures Trading Commission, licenses all kinds of brokers such as the CBOE, the Chicago Board of Trade, ICE futures, the New York Mercantile Exchange, Ledger-X, and Coinbase.
Kalshi is licensed here in the United States, they are based out of the United States, and they owned by American owners. Now this is currently only available to US residents. They’re trying to make it available to other countries soon, but as of right now, it’s only available to US residents. However, if you do want to trade event contracts, and you’re not in the United States, you can do so in Interactive Brokers. You’re just going to be limited to a few select markets.
Now when I found out about this, I decided to reach out to Kalshi to see if I could get you guys some free money. And they agreed to give you $15 in free trades when you deposit $50 and make your first trade. All you have to do to get that $15 in free trades is to use my link. Best of luck to you. I wish you a ton of success trading and I look forward to profiting day and night with you in the future.