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 need gamma. You need to understand the world. Politics. Sports. Weather. Internet culture. Human behavior.
2. Profits can be uncapped if you use automated execution systems.