Kalshi Parlays Glossary: Combos, Event Contracts & Trading Terms
A comprehensive reference for every term you will encounter when trading Kalshi combos and event contracts.
Essential Terms
Whether you are new to Kalshi or an experienced event contract trader, this glossary covers the terminology you need to understand combo mechanics, regulation, and trading strategies. Terms are ordered from foundational concepts to advanced trading vocabulary.
Combo
A multi-leg event contract on Kalshi that bundles two or more conditions into a single tradeable position. The combo pays $1.00 only if every leg resolves favorably. Equivalent to a parlay in sports betting terminology.
Event Contract
A financial contract that pays out based on the outcome of a real-world event. On Kalshi, event contracts are binary (Yes/No) and pay $1.00 if the stated condition is met, $0.00 if it is not.
CFTC
The Commodity Futures Trading Commission, the U.S. federal agency that regulates derivatives markets. Kalshi holds a Designated Contract Market (DCM) license from the CFTC.
Designated Contract Market (DCM)
A CFTC-approved exchange authorized to list and trade regulated derivatives contracts. Kalshi is one of approximately 15 DCMs in the United States, alongside the CME, CBOE, and ICE.
Leg
A single condition within a combo. A two-leg combo has two conditions, both of which must resolve favorably for the combo to pay out. Each leg corresponds to an individual Kalshi event contract.
Settlement
The process by which a Kalshi contract is resolved after the underlying event occurs. Winning contracts pay $1.00, losing contracts pay $0.00. Settlement typically occurs within 1-2 hours of the event.
Resolution Source
The authoritative data source used to determine the outcome of a Kalshi contract. Examples include official government reports (BLS jobs data), exchange closing prices (S&P 500), and weather station readings.
Correlated Events
Two or more events whose outcomes are statistically linked. When Event A occurs, Event B becomes more (positive correlation) or less (negative correlation) likely. Correlated events create combo mispricing opportunities.
Independent Events
Events whose outcomes have no statistical relationship. The occurrence of one does not affect the probability of the other. For independent events, the combo price equals the product of individual leg prices.
Order Book
The list of all outstanding buy and sell orders for a Kalshi contract. The order book shows the best bid (highest buy price), best ask (lowest sell price), and the depth of liquidity at each price level.
Limit Order
An order to buy or sell a contract at a specified price or better. Limit orders provide price control but are not guaranteed to fill. Preferred for combo trading due to wider spreads.
Market Order
An order to buy or sell a contract immediately at the best available price. Market orders guarantee execution but not price. Use cautiously on illiquid combo markets to avoid slippage.
Bid-Ask Spread
The difference between the highest buy price (bid) and lowest sell price (ask) for a contract. Wider spreads indicate lower liquidity. Combo spreads are typically wider than single-leg spreads.
Implied Probability
The probability of an event occurring as implied by the contract price. A contract trading at $0.35 implies a 35% probability. For combos, the price reflects the joint probability of all legs.
Segregated Funds
Customer deposits held in separate accounts from the exchange's operating funds. Required by CFTC regulation. Protects customer capital in the event of exchange bankruptcy or financial difficulties.
1099-B
An IRS tax form reporting proceeds from broker and barter exchange transactions. Kalshi issues 1099-B forms to U.S. customers annually, reporting all settled contract transactions including combos.
Synthetic Combo
A combo position constructed by purchasing individual legs separately rather than buying a pre-built combo contract. Offers more flexibility but requires managing each leg independently.
Kelly Criterion
A mathematical formula for optimal position sizing based on your estimated edge and odds. Kelly % = (bp - q) / b, where b is odds, p is win probability, and q is loss probability. Most traders use fractional Kelly (half or quarter) for combos.
Slippage
The difference between the expected trade price and the actual execution price. More common with market orders on illiquid combos. Slippage directly reduces your edge.
Conditional Probability
The probability of Event B occurring given that Event A has occurred. Critical for combo valuation. If the conditional probability differs significantly from the independent probability, the combo may be mispriced.
Mark-to-Market
The process of valuing your open positions at current market prices. For combos, mark-to-market shows your unrealized profit or loss based on the combo's current trading price versus your entry price.
Liquidity
The ease with which a contract can be bought or sold without significantly affecting its price. High-liquidity combos have tight spreads, deep order books, and fast fills. Low-liquidity combos may be difficult to exit.
Wash Trading
The illegal practice of simultaneously buying and selling the same contract to create artificial volume. Prohibited by CFTC regulations and monitored by Kalshi's market surveillance systems.
Position Limit
The maximum number of contracts a single trader can hold in a given market. Set by Kalshi in compliance with CFTC regulations to prevent excessive concentration and market manipulation.
Using This Glossary
Bookmark this page and refer back to it as you learn combo trading. The terms build on each other: understanding "Event Contract" and "Leg" is prerequisite to understanding "Combo" and "Synthetic Combo." Start with the first five terms and work your way down.
For deeper dives into specific concepts, visit our Combos Guide for mechanics, Strategies for trading techniques, and CFTC Regulation for the regulatory framework. Track how top traders apply these concepts in real-time using Polycool.
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