Prediction Markets != CME Binary Options
TradFi veterans look at CME binary options volumes and conclude that prediction markets cannot scale.
This inference is wrong.
Binary options sit in an awkward middle ground:
1. They require deep financial sophistication -- greeks, vol modeling, risk-neutral pricing -- yet cap upside.
2. Traders capable of that complexity rationally choose instruments with convex payoffs: index futures, equity options, structured products.
Prediction markets invert both:
1. Collapse the skill requirement from financial engineering to information advantage. You don’t n
TradFi veterans look at CME binary options volumes and conclude that prediction markets cannot scale.
This inference is wrong.
Binary options sit in an awkward middle ground:
1. They require deep financial sophistication -- greeks, vol modeling, risk-neutral pricing -- yet cap upside.
2. Traders capable of that complexity rationally choose instruments with convex payoffs: index futures, equity options, structured products.
Prediction markets invert both:
1. Collapse the skill requirement from financial engineering to information advantage. You don’t n
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