prediction-markets-analysis

Prediction Markets Analysis

Generate comprehensive research reports on prediction market events using the Octagon Prediction Markets Agent. This skill combines real-time Kalshi market data with AI-driven analysis to identify mispricings, surface price drivers, and provide actionable trading insights.

Prerequisites

Ensure Octagon MCP is configured in your AI agent (Cursor, Claude Desktop, Windsurf, etc.). See references/mcp-setup.md for installation instructions.

Note: Report generation requires Octagon Plus, Pro, or Enterprise subscription (3 credits per report). Cached reports are free for all users.

Core Functionality

The Prediction Markets Agent provides:

Capability	Description
Market vs. Model Probability	Computes independent model probability and compares against live market price
Event-Driven Research	Identifies key claims, catalysts, and decision-flipping events
Historical Resolution Tracking	Surfaces past resolution outcomes for context on base rates
Contract Snapshot	Returns live bid/ask spreads, last traded price, volume, and open interest
Cross-Category Coverage	120+ active markets across Politics, Economics, Crypto, Sports, Entertainment, Science & Tech, Climate

Model Variants

Variant	Description	Use Case
octagon-prediction-markets-agent	Default. Returns cached report if available, otherwise generates new	General use
octagon-prediction-markets-agent:cache	Always retrieves cached report	Fastest response, may not be latest
octagon-prediction-markets-agent:refresh	Always generates fresh report	Most up-to-date, takes several minutes

Example Queries

Federal Reserve Policy

Analyze this Fed decision prediction market: https://kalshi.com/markets/kxfeddecision/fed-meeting/kxfeddecision-26jun

Cryptocurrency Price Range

Research this Bitcoin price prediction market: https://kalshi.com/markets/kxbtcminy/how-low-will-bitcoin-fall-this-year/kxbtcminy-27jan01

Sports Matchup

Analyze this NHL playoff prediction market: https://kalshi.com/markets/kxnhleast/eastern-conference-championship/kxnhleast-26

Entertainment Awards

Research this Grammy nomination market: https://kalshi.com/markets/kxgrammynomsoty/grammy-nominees-for-song-of-the-year/kxgrammynomsoty-69

IPO Timing

Analyze when SpaceX will IPO: https://kalshi.com/markets/kxipospacex/when-will-spacex-ipo/kxipospacex

Force Fresh Report

Generate a fresh report (bypass cache) for: https://kalshi.com/markets/kxbtcminy/how-low-will-bitcoin-fall-this-year/kxbtcminy-27jan01

Example Response Structure

## Market Overview
- **Event**: Fed Decision June 2026
- **Resolution Date**: June 18, 2026
- **Current Market Price**: 72% (Hold rates)
- **Model Probability**: 68%
- **Mispricing Signal**: Market slightly overpriced

## Price Drivers
1. **Recent Economic Data**: CPI trending lower, supporting rate hold
2. **Fed Communications**: Dovish tone in recent FOMC minutes
3. **Labor Market**: Unemployment stable at 4.1%

## Key Catalysts
| Date | Event | Potential Impact |
|------|-------|------------------|
| June 10 | CPI Release | High - could shift probabilities 5-10% |
| June 12 | FOMC Statement | Medium - language on future path |

## Historical Resolution Context
- Last 6 meetings: 4 holds, 2 cuts
- Model accuracy on this series: 78%

## Contract Details
| Outcome | Bid | Ask | Last | Volume | OI |
|---------|-----|-----|------|--------|-----|
| Hold | 0.71 | 0.73 | 0.72 | 15,234 | 89,000 |
| Cut 25bp | 0.18 | 0.20 | 0.19 | 8,456 | 45,000 |
| Hike | 0.08 | 0.10 | 0.09 | 2,100 | 12,000 |

## Recommendation
**Slight Sell** on Hold contract. Model sees 4% overpricing. Consider waiting for CPI data before positioning.

Market Categories

The agent covers 120+ active markets across:

Category	Example Markets
Politics	Elections, legislation, executive actions
Economics	Fed decisions, inflation, employment data
Crypto	Bitcoin/Ethereum price ranges, ETF approvals
Sports	Championship outcomes, playoff matchups
Entertainment	Awards shows, box office, streaming
Science & Tech	Space launches, AI milestones, IPO timing
Climate	Temperature records, hurricane landfalls

Use Cases

Identify Mispricings

Compare crowd consensus against model-derived probability to find trading opportunities.

Pre-Trade Research

Research key drivers behind a prediction market price before placing a trade.

Catalyst Monitoring

Monitor upcoming events that could move contract prices.

Event Analysis

Get structured, sourced research on fast-moving events in politics, finance, and beyond.

Historical Data Access

Use the prediction_markets_history tool to fetch historical data:

Fetch historical data for prediction market ticker KXFEDDECISION-26JUN from January to June 2026

Parameters:

• ticker: Market ticker symbol
• captured_from: Start date filter
• captured_to: End date filter
• limit: Number of records
• cursor: Pagination cursor

Integration with Other Skills

Combine with other Octagon skills for comprehensive analysis:

Skill	Integration Use
earnings-call-analysis	Analyze CEO comments relevant to prediction market events
sec-8k-analysis	Track material events that could impact market outcomes
stock-performance	Correlate stock moves with prediction market probabilities

Analysis Tips

1. Check model vs. market spread: Larger spreads suggest potential mispricings

2. Monitor catalyst calendar: Know when decision-flipping events are scheduled

3. Review resolution history: Past accuracy provides context for current probabilities

4. Consider liquidity: Check volume and open interest before sizing positions

5. Use cache wisely: Use :cache for quick checks, :refresh before trading

6. Cross-reference sources: Combine prediction market analysis with fundamental research

Supported Platforms

• Kalshi: Full support for all active markets
• Polymarket: Coming soon

For More Markets

Browse the full list of supported markets at octagonai.co/markets.