> 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/sporting-event-example.md).

# Sporting Event Example

## Interpreting the prevailing market price

A user logs into PredictEX and navigates to the upcoming NBA games. They find the game between the Knicks (Away Team) and Lakers (Home Team) listed. This game will show the prevailing odds in the range of 0% to 100%.

These odds (0% to 100%) will correspond to market prices in the range of 0 to 100¢ per contract. At the end of the event, if the Lakers win (Home Team) the settlement price per contract will be 100¢, and if the Knicks win (Away Team), the settlement price per contract will be 0.

Players enter the bet at a price p0, typically close to the market estimate of home team win probability. When they close their position at price pt, the long receives pt-p0, per contract, the short -(pt-p0).\
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PredictEX is unique in offering the ability to place leveraged trades on the outcome of events. For example, if the market consensus for positioning the Lakers to win is at 75 cents, a typical money line bet requires the player to pay 75 cents for the contract that pays $1 if the Lakers win, 0 otherwise. PredictEX allows the player to enter a contract by putting down a margin of less than 75 cents with the upside of winning 25 cents and getting the margin back, the downside being that the position is closed when the price moves sufficiently against the bet and the margin is forfeited and used to cover the leveraged winnings owed on the other side of the trade.\
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a) positioning for the Lakers (Home Team) to win, at 75 cents with max leverage, leads to a gain of 100-75 = 25 cents before fees if the Lakers win at a margin of 8 cents.<mark style="color:red;">\*</mark> If the Lakers lose or the price moves sufficiently against the player’s position during the game, the player incurs a loss of 8 cents plus fees.\
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b) positioning for the Knicks to win (Away Team), at 75 cents with max leverage, leads to a gain of 75 cents before fees if the Knicks win at a margin of 8 cents. If the Knicks lose, or the price moves sufficiently against the trader, the short player loses their investment of 8 cents plus fees.

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*<mark style="color:red;">\*</mark>In order to offer leverage on these markets, PredictEX introduces tailored initial margin and maintenance margin requirements. At max leverage, the initial margin is capped to a league-specific amount (for example 8 cents per contract, allowing for a leverage of 10x at a contract price of 80 cents).*