Unlike the other options available for trading, the Binary Options in finance imply a payoff method, where you either get a fixed amount of an asset or nothing at all. Just as in computer jargon, the binary number 0 and 1 imply signify True value or False value, also interpreted as a win/loss situation, similarly the Binary options only provide you with simply two options making you win or lose a prefixed amount when you trade in them.

So what is this Binary Option Trade all about? Well, in Binary Option trade it is not only important to estimate the quantum of increase or decrease that the underlying instrument is likely to witness, but it is equally important to correctly predict the general direction, whether up or down that the instrument is likely to move in. Therefore, you can enter a call option if you predict a rise in the price of the underlying instrument. Conversely, you can enter a put option if you predict a fall in the price of the underlying instrument.

Also, each Binary option has a contract price and an expiration date attached to it. In this trade, the price of the underlying instrument on the expiration date is compared to underlying contract price to help determine if the price is higher or lower than the contract price.

It is also important to remember that not all instruments are available for binary option trading. To select a binary option trading instrument, check such listed options in the exchange. Also, remember that binary options are always settled in cash and do not involve exchange of any instrument.