A yes/no contract can still encounter a third operational condition: the designated evidence is unavailable. The outcome rule needs to say how that condition is handled before settlement becomes disputed.
A binary payoff does not resolve every evidence problem
The CFTC/SEC alert explains binary options through propositions with outcome-dependent payouts. The hypothetical examples below examine missing reference information; they do not assert the settlement rules of any actual venue. CFTC/SEC — Investor Alert: Binary Options and Fraud
Unknown and false are different statements
Imagine a contract paying if a specified weather station records rainfall above 10 millimetres on a named date. Suppose the station’s required observation is unavailable because of a reporting interruption. The statement “the required record is missing” does not logically prove that rainfall was 10 millimetres or less.
Several rules could be designed for this situation: use an approved backup record, wait for publication, cancel the contract or apply another explicitly defined process. Each produces a different cash-flow or timing outcome. None should be inferred merely from the words “yes” and “no” on a trading screen.
Substituting a nearby station can also change the proposition. Rainfall at Station B is not automatically rainfall at Station A. A backup hierarchy needs to identify which substitution is allowed and under what conditions, rather than treating any available weather number as equivalent evidence.
The same logic applies to a financial threshold. A quote that is absent at the prescribed time should not casually be replaced by the next quote, the previous quote or a price from another venue. Each replacement changes some part of the observation rule unless the contract already allows it.
For a newsroom, the evidence distinction is useful beyond settlement disputes. “No qualifying observation was published” and “a published observation failed the threshold” are different factual claims. A headline collapsing them can misstate what the underlying record establishes.
Read the missing-data clause alongside the threshold
Identify the reference source, publication schedule, backup hierarchy and decision authority. Check what counts as unavailable data, how long any delay can last and what a cancellation would return to each participant.
Preserve the published rules and the relevant source record before interpreting a disputed result. The core review is whether the actual settlement follows the rule for the evidence state that occurred. Missing data should remain visible until that rule resolves it.