(Reuters) - Robinhood announced the launch of U.S. presidential election event contracts on Monday, enabling customers to trade based on their prediction for the tightly contested race between Vice President Kamala Harris and former President Donald Trump.

Markets will be watching the Nov. 5 contest closely and analysts expect volatility across asset classes in the run-up to the results.

The trading platform, popular among retail traders, said the presidential election event contracts will start rolling out to a limited number of users on Monday and that customers trading in them must be citizens of the United States.

Event derivatives trading involves buying and selling contracts that allow traders to speculate on the outcome of specific events such as elections, economic data releases, or policy decisions, without owning the underlying assets related to those events.

These types of derivatives, which are relatively new and generally considered high-risk compared to traditional financial instruments, have gained traction in recent years.

PredictIt, a real-money prediction market platform where users can buy and sell shares on the outcomes of future events, has also gained significant popularity this year in the lead-up to the election.

Robinhood introduced futures and index options trading features to its mobile app, for a fee, earlier this month, marking a shift from its traditional commission-free trading model.

The company, which became synonymous with mom-and-pop investors in 2021, is now aiming to evolve into a comprehensive financial services provider and compete with established brokerages catering to institutional clients.

It committed earlier this year to expanding margins and prioritizing "profitable growth" in 2024. Investor enthusiasm for new products and the focus on profits have fueled a year-to-date stock increase of more than 100%.