What are Binary Options? Trading in binary options has become very popular in a short time. A lot of people even make a living from it. But what exactly are binary options? How are they different from normal options? And how can you make money with binary options? In this article we explore these questions. Binary options (also called 'digital options' or 'all or nothing options') are a special type of options. (Are you not familiar with options? Please read the article 'what are options'.) As with ordinary options, binary options have an underlying asset, which can be a stock, but also, for example, gold, oil, the S&P500 index, or the US Dollar. How much you earn or lose with a binary option depends on the development of the value of the underlying asset.
The characteristics of binary options ď Ź
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The option is independent of the underlying product. When the option expires, it does not mean that the underlying asset will be delivered. You only get the amount of money agreed upon in the option paid out to you. There are only two possible outcomes (hence the name 'binary' or 'digital' options): up or down. It doesn't matter how much the underlying asset has changed in value.