Here is the definition of binary options: It is a kind of option where the compensation is either a fixed amount of an asset or nothing. Both main types of binary options are cash or nothing option binary and asset or nothing binary option. Cash or nothing binary option of a country determines the amount of cash, if the option expires in the money while the asset or nothing pay the value of the underlying asset. Thus, the options are binary in nature because there are only two possible outcomes. They also all or nothing digital options (for more Forex / market interest rates) and of fixed return options (LARGE) (on the American Stock Exchange).