> For the complete documentation index, see [llms.txt](https://predictex.gitbook.io/docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://predictex.gitbook.io/docs/index-price-1.md).

# Index Price

### The index price: managing margin requirements during the event

Leveraged positions and margin requirements are managed around a per event index price ranging between 0 and 100¢. The index price is a weighted average of real time money lines sourced through our data partnerships with [Genius Sports](https://www.geniussports.com/) and [SportRadar](https://sportradar.com/), the same providers used by popular sportsbooks, which aggregate odds per event from several bookmakers globally.

The index price will close at the end of the event and trading will stop. The index price will settle at 100¢ if the home team (the Lakers) wins and 0 if the away team (the Knicks) wins. In a non-sporting event market, the event resolving as a Yes, would see the index price settle at 100¢, while the event resolving as a No, would see the index price settle at 0.

Movements in the index price during an event will be used to manage margin requirements / margin calls during an event.

Continuing our example of a user placing a trade on the Lakers (Home Team) to win at a [market price](/docs/sporting-event-example.md) of 75 (cost of 75¢ per contract), let’s now assume the user wants to trade 1000 contracts putting down 8 cents on the contract as margin.

* To open the position, the user will need to initially stake $80 in margin: 1,000 contracts x $0.08 = $80

During the event, based on movements in the index price, the balance of the margin account will increase / decrease, and there is a risk that additional margin will be required to keep the position open – this is known as a ‘margin call’. The margin level at which margin calls commence is known as the ‘maintenance margin’. For example:

1. If the index price decreases to $0.70, the balance of the margin account will be reduced by $50, down to $50: $100 – (($0.75 – $0.70) x 1000 contracts) = $100 - $50 = $50. At this point the trader’s margin per contract is reduced to 5 cents ($50 / 1000 contracts = $0.05 ). Assuming a maintenance margin per contract of 4 cents is enforced, at this point, the bet remains open and no further margin is required.
2. If the index price reduces further still however, to $0.69 for example, the margin account will have an effective balance of only $40 ($100 – (($0.75 – $0.69) x 1000)) = $100 - $60 = $40), which is exactly at the margin threshold ($40 / 1000 contracts = $0.04).

As such, a small reduction in index price from 0.69 will be met with a margin call. In order to keep the position open, the user will need to stake more funds against the position in order to ensure the effective balance of the margin account remains at the maintenance margin level or higher. If the margin account balance falls below the maintenance margin, the position will be closed and the balance of the margin account will be deposited into the liquidation vault (to service the leveraged winnings of the other side of the trade).

Now let’s instead assume the user is able to keep the position open until the game is completed (i.e. margin account balance is kept above the maintenance margin throughout the event). Note: this would only be possible if the Lakers (Home Team) won the match (if the Knicks (Away Team) won the match the position would have been liquidated as the margin requirements approached the initial stake). In this case, i.e. the Lakers (Home Team) win, the user will receive a $250 payout. 

* the user will win 25 cents per contract: (100c – 75c) = 25 cents
* the profit on the 1000 contracts will be $250 less [trading fees](/docs/trading-fees-1.md) (1000 contracts x 25¢ gain per contract = $250 less trading fees)
* the user’s account will increase by $250 less trading fees and the $80 initial margin will also be returned

We note that leveraged positions can also be traded within the event at any time at the prevailing market price. The win / loss in this scenario will follow the same methodology as above, except the prevailing market price (and therefore the win / loss) will be higher / lower than the 0 / 100 which is resolved when the event has been concluded.