Binary contracts
Polymarket Binary Options Explained
"Binary options" is the phrase crypto traders reach for, and it is almost right: Polymarket contracts pay 1 or 0. But they are event contracts, not options — no exercise, no strike they can be worth anything between, and no counterparty option premium. The difference matters for how you price and backtest them.
Figures measured as of 2026-09-24 on the published PolyOrderbooks archive.
The short answer
Binary payoffs, non-option instruments
A Polymarket contract is a YES/NO token that resolves to 1 (winner) or 0 (loser) against a reference price at a fixed second. It resembles a digital option's payoff but has none of the option mechanics: there is no strike-adjacent value, no exercise decision, and no Greeks beyond the binary's own.
The settlement structure is the same one the archive measures: contracts resolve off a reference price at a predetermined timestamp, and every archived row carries the outcome.
Pricing
How the payoff determines the price
A binary pays 1 or 0, so its price is an implied probability and its expected value is the probability of the winning side. On the venue that probability is expressed on a tick grid — executable prices sit on the 0.99/0.995 grid 98.6% of the time — which makes a "binary" behave more like a bound-sitter than a drifting option.
The difference from BSM pricing is total: no volatility surface, no time value beyond the resolution instant, and a 5-minute contract's price is a forecast of one reference print.
Data
Binary contracts in the archive
The archive treats binary markets as first-class instruments: full L2 books at 250ms, prices, metrics, resolution outcome, and reference timestamps all on one grid. This is the dataset that measured one-sidedness (16.9%), crossed states (3.24%), and the settlement corpus of 298 resolved BTC contracts.
A binary's fill-replay is the correct backtest: walk the ladder, consume the bound, settle on the outcome — the exact workflow the fill simulation pages document.
Honest
The honest framing
Calling them "binary options" invites the wrong pricing machinery; calling them "bets" invites the wrong risk analysis. The honest frame is event contracts with binary payoffs and auditable settlement — and the recorded book is the evidence layer.
FAQ
Are Polymarket markets binary options?
They have binary payoffs but are event contracts: no strike, exercise, or option premium — YES/NO contracts settle to 1 or 0 against a reference price.
How is a binary contract priced?
As an implied probability on a tick grid; executable prices bunch on the 0.99/0.995 grid 98.6% of the time.
Can you backtest them like options?
No — the correct model walks the recorded ladder and settles on the outcome; the archive provides both at 250ms.