From Binary Options Wiki
Binary Options Trading
Binary Options Trading is a type of trading that allows investors to partake in stock, commodity and currency pairs trading, just with less risk and smaller premiums. Different from purchasing stocks, with binary options trading you are merely purchasing the right, but not the obligation to the shares of the stock.
It is a lighter option that some investors prefer as the payout is determined by the direction the stock moves and not the amount of movement in the price. This “all or nothing” simplicity offers only 2 possible outcomes and the buyer is aware from the off-start what they their losses could amount to.
Generally, if the outcome is an in-the-money result the payout to the buyer is a 65-71% return plus their original premium back.
If the stock were to expire out-of-the-money then the buyer would normally just lose their premium although there are companies that offer a 15% return on all out-of-the-money results.