A high binary option can also be called a ‘Call’ option, and a low binary option can also be called a ‘Put’ option. Similarly, high/low Binary Options can be labeled as Call/Put options.

 

High/Low Binary Options require traders to speculate on if they think an underlying asset will expire above or below the rate at which the trade was executed. A high option means that the asset needs to expire above the strike rate, and a low option signifies that the asset needs to expire below the strike rate.

 

The expiry level of a trade will establish whether trades expire In The Money, Out Of The Money – depending on the direction of the high/low binary options which are placed.

 

Let’s examine a couple of scenarios as examples.

 

High binary option:

 

The market rate for the EUR/USD pair is currently 1.4525. A trader places a Call option with a 60-second expiry time. If the expiry level is 1.4526 or anything above that, the trader wins the trade and earns profit. If the expiry level is 1.4524 or anything below that level, the trader loses the trade and his investment amount.

 

Low binary option:

 

The market rate for the EUR/USD pair is currently 1.5236. A trader places a Put option with a 60-second expiry time. If the expiry level is 1.5235 or anything under that, the trader wins the trade and earns profit. If the expiry level is 1.5237 or anything over that rate, the trader loses the trade and his investment amount.

 

For both cases, an expiry rate identical to the strike rate means the trader has neither lost nor won and the trade is thus At The Money.