Binary options are a type of financial derivative where the payoff is either a fixed monetary amount or nothing at all, hence the term 'binary.' Traders bet on whether the price of an underlying asset will be above or below a specified level at the time of expiry. Due to their all-or-nothing nature and the prevalence of unregulated platforms, binary options have been banned or restricted in many jurisdictions including the EU and Australia.
Example
“He placed a binary option predicting that EUR/USD would be above 1.0900 by 3:00 PM, risking $100 for a potential $170 payout.”