How do investors use binary trading?

Investors use binary trading to invest in commodities, stocks, and currency exchanges. Let’s look at an example. Mr. Jones enters in an online binary trading where he purchases a cash-or-nothing binary call option on Orange Company for $200 with a final pay-off of $2,000.

What is a binary option?

A binary option is a financial product where the parties involved in the transaction are assigned one of two outcomes based on whether the option expires in the money. Binary options depend on the outcome of a "yes or no" proposition, hence the name "binary."

Is FINRA skeptical about binary options?

The Financial Industry Regulatory Authority (FINRA) summed up regulator skepticism about these exotic instruments, advising investors "to be particularly wary of non-U.S. companies that offer binary options trading platforms. These include trading applications with names that often imply an easy path to riches."

What are non-US binary options?

Non-U.S. binary options typically have fixed payouts and risk and are offered by individual brokers rather than on an exchange. While typical high-low binary options are the most common type of binary option, international brokers typically offer several other types of binaries as well.