Binary option

Binary option

An option where the payoff is a fixed amount of an asset or nothing at all.

Binary Option

An option contract in which the payoff is some set price or nothing. For example, suppose the strike price on a binary option is $100 and the payoff is $250. If the underlying asset is above $100 when the option is exercised, one receives $250. Otherwise, one does not receive anything. A binary option is also called an all-or-nothing option. See also: Exotic option.