Binary Option

A binary option, also known as a digital option, is a derivative where the payoff is either a fixed cash amount or nothing at all, depending on whether the underlying asset satisfies a condition at expiration. It is a simple "all-or-nothing" bet on the direction or range of an asset price.

If the condition is met, the holder receives the fixed payout; if not, the contract expires worthless. Binary options are highly popular in retail trading and decentralized prediction markets due to their simplicity and clear risk-reward profile.

They do not involve the delivery of the underlying asset, making them purely speculative instruments. In crypto, they are often used to hedge against specific events or to participate in market movements without the complexity of delta hedging or gamma management.