A binary option is a financial option in which the payoff is either some fixed monetary amount or nothing at all. While binary options may be used in theoretical asset pricing, they are prone to fraud in their applications and hence banned by regulators in many jurisdictions as forex intermarket form of gambling.
Many binary option outlets have been exposed as fraudulent. The use of the names of famous and respectable people such as Richard Branson to encourage people to buy fake “investments” is frequent and increasing. Binary options “are based on a simple ‘yes’ or ‘no’ proposition: Will an underlying asset be above a certain price at a certain time? Traders place wagers as to whether that will or will not happen. Investopedia described the binary options trading process in the U. This is called being “in the money.
This is called being “out of the money. The bid and offer fluctuate until the option expires. 100 if the bet is correct, 0 if it is not. In the online binary options industry, where the contracts are sold by a broker to a customer in an OTC manner, a different option pricing model is used.