# Horizon contract vs binary option: same payoff, different market

A horizon contract has a binary option's payoff, but the price is fixed at 50/50, an order book sets the strike, and the other side is another trader. Compared.

Source: https://rizon.markets/learn/horizon-contract-vs-binary-option (updated 2026-11-02)

> **Short answer:** By payoff, a horizon contract is a binary option: at expiry it pays a fixed amount or nothing. It differs in how it's quoted and who's on the other side. A listed binary option fixes the strike and lets the premium float. A platform-priced one fixes the strike and lets the venue set the payout. A horizon contract fixes the payout at 2× and the premium at half of that, and an order book sets the strike, so the other side is another trader at a level the market chose. Rizon's horizon contracts are paper money.

The SEC's Investor.gov glossary says that when a binary option expires, the holder ["receives either a pre-determined amount of cash or nothing at all"](https://www.investor.gov/introduction-investing/investing-basics/glossary/binary-options). The textbook name is a cash-or-nothing digital option. A [horizon contract](https://rizon.markets/horizon-contracts) has exactly that payoff, so the useful comparison is the market around it.

## Three ways to sell the same payoff

| | Listed binary option | Platform-priced binary | Horizon contract |
|---|---|---|---|
| What's fixed | The strike and the payout | The strike and, once you trade, the payout ratio | The price: you pay your size and a win pays 2× |
| What moves | The premium, up to the payout | The venue's payout ratio, trade by trade | The strike |
| Who sets the price | An order book | The venue | An order book |
| A quote tells you | The chance of finishing beyond that strike | What the venue offers you | The market's median of the number |
| Number of products | One per strike and expiry | One per strike and expiry | One book per market |
| Underlying | Usually a tradable price | Usually a tradable price | Any number: a price, a count, a rate, a date |
| Before expiry | Usually can sell | Often can't | Can't: hedge with the other side |

Nadex, which Crypto.com bought in 2022, built the first column for US retail traders, with binaries priced from 0 to 100. Binance's [Event Contracts](https://www.binance.com/en/support/faq/what-are-binance-event-contracts-and-how-to-use-it-172247f1c4b8401ab106fb63900f3825) are an example of the second: its FAQ says the payout ratio "is calculated internally based on the asset volatility and market risk at any given time", lists durations of 10 minutes to 1 day, and says the contracts "cannot be closed before their expiration time".

## What a payout ratio costs, and what a spread costs

With a venue-set payout ratio, the cost is built into what you get paid when you win. If a $1 premium pays you $r of profit on a win, you need to win 1 ÷ (1 + r) of the time just to break even:

| Payout ratio on a win (%) | Break-even win rate (%) | Cost to a trader with no edge (% of premium) |
|---|---|---|
| 70 | 58.8 | 15 |
| 80 | 55.6 | 10 |
| 85 | 54.1 | 7.5 |
| 90 | 52.6 | 5 |
| 100 | 50.0 | 0 |

A horizon contract is the 100% row. Its only cost is the spread, as on any order book: buying takes the best ask, a strike above the middle, and Rizon charges no fee on top. The two costs work differently: a payout ratio is set by the venue you're trading against, while a spread is set by whoever quotes the book, and [anyone can quote a tighter one](https://rizon.markets/learn/how-to-make-markets-in-horizon-contracts).

## Why the book matters

A platform-priced binary has one question a trader can't check: is the payout fair? When the venue sets it, you see one number with nothing around it. On an order book you can see every quote, who's willing to take the other side and at what level, and the spread tells you the cost directly. In a horizon book the midpoint is also a forecast you can compare with the rest of the world: Rizon's [`HOUSE-R-2026`](https://rizon.markets/?m=HOUSE-R-2026&ref=learn-horizon-contract-vs-binary-option) quoted 193 seats on Nov 2, 2026, a number you can hold up against Polymarket's and Kalshi's buckets.

## Binary options have a history

The SEC and CFTC have warned about [fraud on online binary options platforms](https://www.sec.gov/oiea/investor-alerts-bulletins/ia_binaryoptions.html) for years, mainly unregistered platforms that refuse withdrawals or manipulate prices. The UK's [Financial Conduct Authority banned their sale to retail consumers](https://www.fca.org.uk/news/statements/fca-confirms-permanent-ban-sale-binary-options-retail-consumers) in 2019, and the European Securities and Markets Authority temporarily prohibited it across the EU from July 2018.

So it's fair to ask what stops a horizon contract from being the same thing. On Rizon today, the answer is that no money is involved: it's a paper exchange with no deposits. More generally, the questions to ask of any binary product are the same:

| Question | Why it matters |
|---|---|
| Who's on the other side? | A venue that trades against you profits when you lose |
| Who decides the settlement price? | It should come from a named outside source you can check |
| Can you see every quote? | An order book shows the cost; a single payout ratio hides it |
| Is it regulated where you live? | Rules on binaries differ widely, and some places ban them for retail traders |

## FAQ

### Is a horizon contract a binary option?

By payoff, yes: it's a fixed amount or nothing at expiry. In market structure it's different, because the price is fixed and an order book sets the strike. So it's closer to a futures book with a digital payoff than to what most people picture as a binary option.

### Are horizon contracts legal?

Rizon's are paper money with no deposits and no withdrawals, so nothing of value changes hands. A real-money version would fall under whatever rules cover binary and event contracts where it's offered, and those vary by country. This isn't legal advice.

### Who is the counterparty in a horizon contract?

Another account. Every trade on Rizon is between two accounts in the book. There's no house, and its own market-making bots trade through the public API like anyone else's.

### Can a horizon contract's payout change?

No. It's always 2× your size for a win, nothing for a loss, and your size back on a push. Only the strike moves, and your strike is locked at your fill.

### What's the difference between a horizon contract and a digital option?

A digital option is the payoff; a horizon contract is that payoff with its terms set a particular way: the premium is half the payout, the strike comes from an order book, and the underlying can be any number with a named source, not only a tradable price.