Definition
Binary spread
The gap between $1.00 and the sum of best-ask YES + NO on a binary market.
Binary spread
A binary spread is the difference between $1.00 and the sum of the best-ask prices for the YES and NO outcomes in a binary market. Traders spot a positive binary spread when bestAsk(YES) + bestAsk(NO) < $1.00; that gap represents the gross amount available to purchase a complete, priced pair of outcomes at current ask prices.
In context
On Polymarket, the binary spread is PolyArb's primary intra-market signal. When the sum of best-ask prices across the two complementary outcomes is less than $1.00, an arbitrageur can buy both legs (or a complete set via a CTF split) and later settle or sell the positions. The arithmetic is simple: Edge = $1.00 − (bestAsk(YES) + bestAsk(NO)). In practice you must deduct taker fees, expect slippage and partial fills, and account for resolution and settlement timing risk (Polymarket uses UMA for resolution). The CLOB enforces tick sizes (usually $0.01, tightening near extremes), and WebSocket feeds expose best_bid_ask and tick_size_change events that help you monitor spreads in real time.
Why it matters
A positive binary spread indicates a mispricing inside the same market: the two asks together cost less than the guaranteed $1.00 payout of a complete winning set. Historically, arbitrageurs have extracted meaningful value from such intra-market opportunities (documented collective extraction is ~ $40M between April 2024 and April 2025). Spreads on liquid markets are typically narrow and ephemeral; monitoring best-ask levels and order-book depth is essential.
How to read it quickly
- If bestAsk(YES) + bestAsk(NO) < $1.00 → positive binary spread (potential intra-market arb).
- If bestAsk(YES) + bestAsk(NO) = $1.00 → no spread; market is fairly priced.
- If bestAsk(YES) + bestAsk(NO) > $1.00 → negative spread; selling a complete set and buying back legs may be needed for other strategies, but not a straightforward arb.
See also
- /glossary/edge