Settlement.
One published number settles the window. No vote, no judgement.
The rule.
Take the index change over the window, using five day averages at each end. Short gets the share of the range the index climbed. Long gets the rest.
Example: US high yield credit.
Range −30% to +20%. The index falls 17.5%, a quarter of the way up the range. Short gets 25¢, long gets 75¢.
The settlement math
Start
1,200
End
990
Change
−17.5%
−17.5%
−30% floor+20% cap
Every input is published, so anyone can check it.
Outside the range.
Below the floor, long gets the full dollar. Above the cap, short does.
If the print is late or wrong.
A fallback plan is published before trading. It runs in order and can't be skipped.