So, what is a Kalshi weather contract? At bottom, a yes-or-no question about a thermometer. The market asks something like "what will the high temperature be in Austin on Tuesday," splits the possible answers into temperature bands, and lets you buy or sell each band as its own contract. Every one of those contracts settles at exactly $1 or $0. There is no point spread, no juice hidden in a moneyline, no parlay math. One official number comes in, one band contains it, and that band's contracts pay a dollar while every other band's pay nothing.
The mechanics take about five minutes to learn, and this page is that five minutes. What actually trips new traders up is not the ladder of bands. It is two quieter details: what the price of a contract really means, and which thermometer gets the final word. That second one lives in a single line of the market rules, and it separates people who read the instrument from people who read a weather app. I will pay it off before the end.
The Quick Answer
A Kalshi weather contract is a yes/no contract on where a city's official high or low temperature lands, and every one settles at exactly $1 or $0. The market splits the possible readings into mutually exclusive bands — 97°–98°, 99°–100°, and so on — and each band trades on its own, with the price in cents sitting roughly at the market's implied probability that the band hits. The full band ladder with a worked example, why the whole ladder's prices sum to about a dollar, and the settlement-station line in the rules that costs careless traders real money are all below.
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One Question, Split Into Bands
Start with the shape of the market, because everything else follows from it. Kalshi does not ask you to predict the exact temperature. It takes the full range of plausible outcomes for a city's daily high (or overnight low) and cuts it into bands, usually a few degrees wide, with an open-ended band at each end to catch surprises: "96° or below" at the bottom, "103° or above" at the top.
That ladder structure is doing something clever. Nobody has to be right about a single degree; you are trading which range the day lands in. And because the Kalshi temperature bands together cover every possible reading, the ladder as a whole always resolves. There is no push, no void for a weird outcome. Some band contains the number.
The bands are also mutually exclusive. The official high cannot be both 98° and 101°, so exactly one band in the ladder pays out. Hold that thought, because it is the reason the prices behave the way they do two sections from now.
Each Band Is A Yes/No Contract That Settles At $1 Or $0
Every band on the ladder is a standalone contract with two sides. Buy Yes on "99°–100°" and you are paid $1 per contract if the official high lands at 99° or 100°, and $0 if it lands anywhere else. Buy No on that same band and the payout flips: you collect the dollar if the high misses the band in either direction.
That binary settlement is the whole engine. There are no odds to interpret and no graded margins of victory; a contract is worth exactly one dollar or exactly zero the moment the official number is in. Your profit is just the gap between what you paid and where it settled. Pay 41 cents for a Yes that wins and you make 59 cents per contract, before Kalshi's trading fees, which nibble at the edges of every fill.
Because both sides exist on every band, you are never forced into predicting the weather. Selling "103° or above" is not a forecast that it will be cool. It is a position that one specific extreme will not happen, and it wins in every band but one.
The Price Is The Probability, Roughly
Why does a contract cost 22 cents instead of some arbitrary number? Because a claim on $1 that pays off 22% of the time is worth about 22 cents. That is the clean consequence of binary settlement: the price of a Yes contract is roughly the market's implied probability that the band hits. No conversion formula, no vig-stripping, no decoding a minus sign. A 4-cent band is priced as a longshot; a 41-cent band is the market's favorite scenario.
This is the single biggest readability difference between an exchange and a sportsbook. A standard -110/-110 line at DraftKings or FanDuel carries about 4.8% hold, so the probability you actually face is buried until you work out the no-vig price. A Kalshi ladder hands you the distribution raw and charges its toll in the spread instead. (If you want the full translation table between cent prices and American odds, our Kalshi odds explainer is the dictionary.)
Now cash in that thought you were holding: since exactly one band pays, the Yes prices across a full ladder have to add up to roughly one dollar. The market is not pricing bands in isolation. It is spreading 100 percentage points of probability across the whole ladder. Which means a temperature ladder is not really a list of bets at all: it is a live probability distribution for tomorrow's weather, drawn in prices.
Reading A Full Ladder: A Worked Example
Here is a representative ladder for an Austin high-temperature market on a summer day, with illustrative prices:
| Band | Yes price | Implied probability |
|---|---|---|
| 96° Or Below | 4¢ | ~4% |
| 97°–98° | 22¢ | ~22% |
| 99°–100° | 41¢ | ~41% |
| 101°–102° | 26¢ | ~26% |
| 103° Or Above | 8¢ | ~8% |
The most telling row is not the 41-cent favorite. It is the pair of tails. The market is saying a surprise cool day and a scorcher are both live but unlikely, and it prices them in single digits rather than at zero, because weather delivers surprises often enough that no band is ever truly free. Add the column up and you get about 101 cents, a shade over a dollar; that extra cent is the market's spread, the small cost of trading, sitting where a sportsbook would hide several points of vig. One caution that follows directly from the structure: reading one band in isolation misses the picture. The 22-cent band only means something relative to its neighbors, the same way a bell curve only means something as a whole.
Where The Settlement Number Comes From
Here is the detail I promised, the one line in the rules that costs careless traders real money. Every temperature market names its settlement source: one specific weather station whose official reading decides the contract. The settlement station is named in the rules of the market, and it is the only thermometer that matters.
That matters for two reasons. First, the station is not always the one you would guess. Houston markets settle on Hobby Airport's reading, not Bush Intercontinental's, and the two can disagree by a meaningful margin on a given day. Second, the number in your weather app is a blended city reading, not the station's official figure. Traders who "knew" the temperature and still lost usually lost to this line, not to the forecast.
The settlement number also arrives on a clock worth understanding. A daily high is a running maximum: once Austin touches 100°, the "96° or below" and "97°–98°" bands in our ladder are dead, because the high can only rise from there. An overnight low works the same way in reverse. A partial day's observation is a floor under one kind of market and a ceiling over the other.
The Risk Shape: Why Selling The Long Shot Bites
Once you can read the ladder, the tempting trade is obvious: sell the tails. That 4-cent band looks like found change; sell it and collect the premium when the cool day never comes. Before you do, run the arithmetic on the shape of that trade. Selling an unlikely band collects a few cents and risks most of a dollar, and roughly speaking, one loss erases the premiums from 30 or 40 wins.
That asymmetry, not the hit rate, is the whole game. A seller of long shots can be right week after week and give it all back in one afternoon, and a red day that wipes out a long green stretch is what this style of position looks like when it is working as designed, not a malfunction. If you take nothing else from this page, take that: position sizing matters more in these markets than being right does. The mechanics are beginner-friendly; the payoff shape is not.
Is Any Of This An Edge? An Honest Answer
One real advantage weather markets offer a newcomer: there is no inside information. No injury report, no locker-room leak. Every participant is reading the same publicly funded forecast, which makes this one of the few markets where a careful beginner is not structurally behind. That is a big part of why a weather contract compares well to a sportsbook moneyline as a first instrument to learn on.
It is not an edge, though, and we can say that from experience, because Stokastic trades these markets and holds positions in them. Our public calibration log is still young, and so far it says something humbling: the outcomes we traded have hit at close to the rate the market implied they would, and the confidence interval around a sample that small easily contains the market's number, so the difference is not statistically significant in either direction. Settling a question that fine takes on the order of a thousand settled contracts, which is why we judge the strategy on sample size and never on a single night's results. Anyone who tells you they have a proven system on a few dozen weather trades is reading noise.
We keep the running picture, wins and losses alike, on our Kalshi weather markets hub, and nothing in this cluster is a pick.
The Instrument Is Simple; Treat It That Way
The mechanics you came for fit in a sentence: bands, binary settlement, price as probability. What separates people who trade this well from people who donate is the two quieter details this page kept circling back to. Read the rules for the station before you click, because the contract grades on Hobby's thermometer while your weather app quotes greater Houston. And respect the arithmetic of selling long shots, where 30 small wins can walk out the door in one hot afternoon. Get those two right and the ladder becomes what it quietly is: the fastest way to learn to read any market as a probability distribution. The same reflex powers line shopping on sportsbook markets — two prices for one event on an odds screen only mean something once you read them both as probabilities — and it carries directly to sports markets on Kalshi and to prediction markets generally.
So learn it the way it deserves: read the rules for the station, read the ladder as a whole, and respect the lopsided arithmetic of selling long shots. And if sportsbook markets are more your speed while you get comfortable, our free expert picks are an easy place to watch probability-first thinking applied to games instead of thermometers.
More on this: Kalshi Weather Markets: The Live Hub · When Do Kalshi Weather Markets Close? The 24-Hour Clock, Hour By Hour · Kalshi Weather Trading: '100 In Phoenix' Isn't A Trade · Kalshi High Temp Vs Low Temp Markets: Two Different Games · How Kalshi's Rain Markets Decide It Rained
FAQ: Kalshi Temperature Contracts
How do Kalshi weather contracts work? A market names a city and a day, splits the possible official temperature into bands, and trades each band as a yes/no contract. The band containing the official reading settles at $1 per contract; every other band settles at $0.
What does the price of a band mean? The Yes price in cents is roughly the market's implied probability in percent. A 26-cent band is priced as about a 26% chance, before the spread and trading fees.
Can I get out before the market settles? Yes. These are exchange-traded contracts, so you can sell a position you hold (or buy one back) at the current price any time the market is open, rather than waiting for settlement.
Which thermometer decides the outcome? The settlement station named in that market's rules. Its official reading is the only number that matters, and it can differ from the blended city temperature a weather app shows.
Disclosure and fine print.Stokastic trades Kalshi weather markets and holds positions in them; where a settled position is described in this series, we were the seller. Kalshi weather contracts are CFTC-regulated event derivatives traded on a designated contract market, not sportsbook wagers, and a position can lose its full value. 18+, available where Kalshi operates; the risk of loss is real and, on the side we trade, individually large. This series is an open research log of a strategy we have not proven. Nothing here is trading advice, and nothing on this page is a pick or a recommendation.
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