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Define: Binary Options

Binary Options are options that has only two fixed outcomes; Win A Fixed Amount or Lose All. Its a form of exotic option that has recently been approved for public trading on several stocks, ETFs and indexes in the US market.

Binary options are also known as Fixed Return Options (FRO) due to the fact that you either win a fixed return or lose it all. There is nothing in between. When you buy a binary option and it ends up in the money (no matter how deep in the money or how little), you win a fixed amount. Binary call options win a fixed amount when the stock ends up higher than its strike price and Binary put options win a fixed amount when the stock ends up lower than its strike price.

Read the full tutorial on Binary Options.