When trading binary options, a trader has the choice between four different underlying asset types. An underlying asset is a financial instrument which a trader invests in, and most (if not all) brokers will provide their clients with a list of four underlying asset types to choose from.
A binary options investor has the option of trading any underlying asset types a broker offers, including commodities (Gold, Silver, Brent Crude, etc.), currencies (USD, EUR, JPY, etc.), indices (NASDAQ, FTSE 100, CAC 40, etc), and stocks (British Airways, Google, Apple, etc).
Here is a short elaboration on underlying asset types:
Commodities are made up of a list of valued raw materials which are worth trading for any traders to make profit. The list includes gold, silver, oil, and coffee, amongst others.
Currencies are always traded in pairs with other currencies, or are paired with commodities. The most common are EUR/USD, USD/JPY, EUR/JPY, amongst others. The foreign exchange market is the largest in the world with a turnover of $3 trillion per day, and is active 24 hours a day, for 5 days a week.
In essence, a group of stocks form indices. The most common ones include the Dow Jones, the NYSE, and the NASDAQ 100.