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In order to grasp the concept of binary options trading, three key notions must be comprehended. The assets are drawn from stocks, indices, foreign exchange, and commodities. Contracts are offered with expiry rates ranging from fifteen minutes to thirty minutes to one hour to end of day to one week and to even one month.

In binary options, it is fixed once the spot price is above the strike price. It is named binary because the payoff graph has only 2 possible values. If regular options are difficult, then exotic options are even worse due to even more complex pricing mechanism and rules. Binary options are either win or lose it all type of option with a fixed payout and a fixed loss.

This means that if the underlying asset crosses beyond its strike price, you win a fixed profit while regular options would have given you increasingly higher profits as long as the underlying asset keeps going in that direction.