Two-Leg Hedged Arbitrage on Polymarket BTC Up/Down Contracts

Summary

The document describes a bot for 15-minute Polymarket BTC Up/Down contracts. It monitors both asks for a sharp fall in either side, then submits buy orders for that side and its opposite. The target is to keep the combined purchase cost below one USDC, so a fully matched pair can be held for redemption at expiry. The strategy is designed to profit from temporary pricing dislocations without forecasting BTC's direction.

Its state handling addresses unmatched orders: if only one leg fills, the bot cancels the other and manages the exposed position with a floor-price exit, an early profit exit, or a late stop. It also describes confirming cancellations and redeeming eligible positions after expiry. The source provides implementation details and configurable thresholds, but the document gives no performance results or evidence that the pair will reliably fill below the payout value. Partial fills, execution timing, fees, and venue behavior can affect the outcome; the stated arbitrage condition alone does not establish a risk-free realized profit.

Key ideas

• The bot watches for a rapid decline in either contract's ask and submits buys on both Up and Down.
• A combined entry cost below one USDC is intended to leave a payout spread if both legs fill.
• If only one order fills, the strategy cancels the other and applies price-based position management.
• The implementation includes order-state checks, expiry handling, and redemption of eligible positions.
• The document provides no performance evidence, and execution frictions can weaken the intended arbitrage.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.