What's the difference between perps and prediction markets?
A prediction market is a bet on an answer: you buy a yes/no share, and it resolves at $1 or $0 when the question settles. A perp is a position on a direction: no question, no resolution, just a price you're long or short. Your CEO uses each where it fits, and your guardrails apply to both.
Different questions, different shapes
- Prediction market “Will Barcelona win this match?” You pay a price in cents that reads as a probability, and at resolution each correct share pays $1. Defined end, defined worst case: the stake.
- Perp “Does Bitcoin go up from here?” No resolution date. Your P&L breathes with the price every hour you hold, and leverage can scale it, both ways.
When each one fits
Discrete events with a knowable answer, sports, elections, deadlines, fit prediction markets: the edge is in reading the question better than the crowd. Continuous views, “this asset is mispriced this week”, fit perps: the edge is in direction and timing. Some theses can be expressed either way; part of your CEO's job is picking the cleaner instrument for the read it has.
Same discipline on both
Whatever the instrument, the frame doesn't move: the fund never bets a price it believes is fair, sizes inside your caps, respects the conviction floor, and explains the position in its reports. Perps aren't a side game with looser rules, they're the same fund, second instrument.