A Low Option, otherwise known as a Put Option, is an option which offers a return on investment of up to 85% in the event of an underlying asset expiring at a lower rate than the strike price.
Typically traded on a High/Low instrument, a trader trading binary options places a Low Option when speculating that an asset’s expiry rate will be lower than the strike rate, and will gain profit based on that speculation.
For example, if you place a Low Option on EUR/USD with a strike price of 1.3549 and the option expires at 1.3534, the trade is said to be In The Money and you therefore make a return on your investment.
If your place a similar option and the expiry level is at 1.3555, the trade is Out Of The Money and you lose your funds. Some binary options brokers may offer a small refund in case of a loss, though this is uncommon.
If a similar option is placed and the strike price and current market price are identical, the trade is therefore At The Money, resulting in neither a win nor a loss. The initial investment is returned to the account balance and another position must then be opened.