Binary options (also called 'digital options' or 'all or nothing options') are a special type of options. (Are you not familiar   with options? Please read the article 'what are options'.) As with ordinary options, binary options have an underlying asset,   which can be a stock, but also, for example, gold, oil, the S&P500 index, or the US Dollar. How much you earn or lose with a   binary option depends on the development of the value of the underlying asset.