Binary options are a form of fixed-return financial trading where the outcome of a trade is based on a simple yes-or-no proposition. The most common question a binary options trade asks is: will a certain asset be above or below a certain price at a specific point in time? If the answer is correct, the trade settles at 100. If not, it settles at 0.
While the basic principle is always the same—defined risk, defined reward—the structure and conditions of binary options contracts can vary depending on the type. Below are the primary variations used by traders and platforms.
High/Low (Call/Put) Options
This is the most widely recognised format and the simplest to understand. A trader selects whether the price of an asset will be higher or lower than the current market price at expiry.
For example, if the EUR/USD is trading at 1.1000 and the trader chooses a “Call” option with a 5-minute expiry, they are predicting that the price will be above 1.1000 when the 5 minutes are up. If it is, the trade pays out. If not, the trade results in a loss.
These options are typically used for short-term market movements and are available across most brokers and platforms.
One Touch Options
One Touch options pay out if the asset reaches a specific target price at any point before expiry—not necessarily at the expiry time itself. If the predetermined level is touched even once, the trader receives the full payout.
This format is useful in volatile markets or when strong directional moves are expected. However, if the market never touches the target—even by a fraction—the trade settles at zero.
Some platforms also offer “No Touch” options, where the trade pays out if the price does not touch the specified level before expiry.
Range or Boundary Options
Range options ask whether the price of an asset will stay within a defined range (bounded by two price levels) until expiry. Traders can choose “In Range” if they believe price will stay within those levels, or “Out of Range” if they expect it to break out.
This structure is particularly suited to low-volatility environments or when the trader expects consolidation rather than trending moves.
Ladder Options
Ladder options offer multiple strike prices at staggered levels, each with different payouts. The further “out of the money” the strike is, the higher the potential reward—because it’s less likely to be hit.
Traders can buy options at each level based on how aggressive or conservative they want to be. Some levels may already be in the money, offering smaller returns but a higher probability of profit. Others are well out of reach but offer a larger payout.
Ladder options require more strategic planning and are typically used by more experienced traders.
60-Second Options (and Other Short-Term Expiries)
Some brokers offer ultra-short binary contracts that last as little as 30 seconds, with 60-second options being the most common. These are based on the high/low format but settle extremely quickly.
While they offer fast results and are tempting for those seeking immediate feedback, the extreme short duration increases risk and makes trades more vulnerable to market noise and slippage.
These short-term contracts are often used for high-frequency trading strategies but should be approached cautiously due to their volatility.
Pairs Options
In a pairs option, the trader chooses between two correlated assets and predicts which one will perform better over the contract period. For example, a trader might compare Apple vs. Microsoft and choose the one they expect to outperform the other.
This format is less about absolute price movement and more about relative strength. It is not commonly offered across all platforms but can appeal to traders who follow sector trends or specific company rivalries.
Event-Based Options
Some binary options are based on real-world events rather than just price levels. These could involve outcomes such as the result of an earnings report, an interest rate decision, or a specific economic figure hitting a target.
While less common and often tied to specific trading platforms or custom contracts, these options align more with prediction market mechanics than pure financial trading.
Digital 100s (Exchange-Traded Binaries)
Digital 100s, offered on platforms like IG, function similarly to binary options but are structured more transparently and are typically exchange-listed. The pricing moves between 0 and 100, reflecting the market’s view of the probability of a certain condition being true at expiry.
This format is popular among traders looking for more structure, clearer pricing, and more consistent execution than what’s offered by many traditional binary options brokers.