Binary Option Trading Explained Also known as digital options or fixed-return options, binary options belong to a special class of exotic options in which the payoff is either a fixed predetermined amount or nothing at all. For the common high-low binary option, the trader buys a binary call option if he thinks the price of the underlying asset will go up binary option double up the current market price or if he thinks the underlying asset price will go down, then he will buy a binary put option. If his assessment is correct, he will receive a payout.
Otherwise, he loses the initial investment. As binary options have fixed returns, it doesn’t matter how high or how low the price of the underlying has moved past the strike price. The payout is also fixed and known prior to entering the trade. Binary options also typically have very short expiration times ranging from as fast as 60 seconds to just a few weeks. USD expiring in the next 5 minutes.