Binary options

Binary options, also called all or nothing options, are simply options that either pay a fixed amount or nothing. If the option is in the money the holder gets a fixed amount, if the option is out of the money the holder gets nothing.

The value of a binary option that is close to being at the money is likely to be very volatile, especially close to expiry.

A binary option may also incorporate features of other types of option. For example, there are binary barrier options.