Binary Market
A prediction market with exactly two mutually exclusive outcomes, typically YES and NO, each paying $1 or $0 at resolution.
Definition
A binary market is a prediction market structured around a yes/no question. At resolution, the YES outcome token pays $1 if the event occurred and $0 if it did not; the NO token pays the opposite. The market price of YES at any time reflects the crowd's implied probability that the event will occur.
In practice
The 5-minute BTC binary on Polymarket asks "Will BTC be above X at 5-minute mark?" YES trades between $0.01 and $0.99. A bot buying YES at $0.48 and selling (or resolving) at $0.55 earns $0.07 per share before fees. Binary markets are simpler to model than multi-outcome markets because there are only two states, the probabilities sum to 1, and the win condition is unambiguous. All predtools bot strategies currently target binary markets on Polymarket.