Binary options types
The main binary options types are high/low, one touch, no touch, range or boundary, and ladder contracts. Double touch and double no touch contracts add a second price barrier. The difference is not simply the name on the trading screen: each structure asks a different question about price.
Some contracts depend on where the market finishes at expiration. Others depend on whether it reaches a level at any point before then. Confusing those conditions can turn a correct market forecast into a losing trade. This guide builds on the broader explanation of how binary options work, focusing on contract structures rather than trading strategies.
These products can put the entire purchase amount at risk. The CFTC’s binary options warning also distinguishes registered US exchanges from unregistered platforms, some of which manipulate trades or refuse withdrawals. A familiar contract name does not establish that a provider is legitimate.
Binary options types compared
A useful starting point is the event that triggers payment. ESMA’s analysis of binary option structures distinguishes several such events and notes that terminology varies between firms.
| Contract type | Condition being predicted | When price matters |
|---|---|---|
| High/low | Price finishes above or below a strike | At expiration |
| One touch | Price reaches a barrier | During the observation period |
| No touch | Price never reaches a barrier | Throughout the observation period |
| Range or boundary | Price finishes inside or outside two boundaries | At expiration, unless stated otherwise |
| Double one touch | Price reaches either of two barriers | During the observation period |
| Double no touch | Price reaches neither barrier | Throughout the observation period |
| Ladder | Price satisfies a condition at a selected strike level | Usually at expiration; check the terms |
High/low binary options
High/low contracts ask whether the settlement price will be above or below a stated strike at expiration. Platforms may use labels such as up/down or call/put. The joint CFTC and SEC investor alert describes this basic yes/no structure: the buyer receives a predetermined cash amount if the condition is satisfied, or generally nothing if it is not.
Consider a hypothetical contract asking whether EUR/USD will finish above 1.1000 at 3:00 p.m. A settlement price of 1.1001 satisfies that condition. A settlement price of 1.0999 does not. If the pair rises to 1.1030 earlier but falls back before expiration, that earlier rise does not rescue the position.
The strike deserves as much attention as the direction. A prediction that price will rise from its entry level is different from a prediction that it will finish above a more distant target. “Up” is incomplete without a reference price and deadline.
For a standard fixed payout contract, finishing far above the strike does not produce more money than finishing just above it. The contract pays for the condition being met, not for the size of the move.
One touch and no touch binary options
A one touch contract pays if the market reaches a stated barrier during the observation period. A no touch contract requires the market to avoid that barrier throughout the period. Deriv’s touch/no touch documentation sets out this distinction directly.
Suppose a hypothetical asset starts at 100, with an upper barrier at 105 and a one hour observation period. If the qualifying price reaches 105 after 20 minutes, the one touch condition has been met. A later retreat to 101 does not undo that touch.
For a no touch position using the same barrier and observation rules, that move to 105 causes the condition to fail. Finishing below 105 is not enough: the price must avoid the barrier for the full period.
Do not assume every product with “touch” in its name follows this simple arrangement. Dukascopy’s published trading conditions, for example, describe Touch Binaries with both a profit barrier and a loss barrier. Whichever is reached first determines the result; if neither is reached, the contract amount is returned. That is a different proposition from a basic single barrier touch contract.
Range and boundary binary options
Range contracts use an upper and lower boundary. An expiration based “inside” contract requires the final price to fall between them. An “outside” contract requires it to finish beyond one of them.
The trap is confusing ends inside with stays inside. Deriv’s digital options descriptions distinguish Ends Between/Ends Outside from Stays Between/Goes Outside. The former looks at the final price; the latter monitors the price path during the contract.
Take a hypothetical range of 98 to 102. The market rises to 103 halfway through the trade, then finishes at 101. An ends inside contract can satisfy its condition. A stays inside contract cannot, because the earlier move breached the boundary.
That single word changes what must be forecast. A market can finish in a narrow range after a very unsettled session. The closing result tells you nothing about whether it stayed there.
Double one touch and double no touch
Double barrier structures monitor two levels rather than one. As shown in FinPricing’s technical guide to touch option conditions, a standard double one touch contract succeeds when either boundary is reached. “Double” refers to the two barriers; it does not normally mean both must be touched.
A double no touch contract requires the price to avoid both barriers throughout the observation period.
With hypothetical boundaries at 95 and 105, a move from 100 to 105 satisfies the double one touch condition and defeats the double no touch condition. A move to 95 has the same effect. The direction differs, but the relevant event is identical: one boundary was reached.
Ladder binary options
Ladder contracts organize predictions around different strike levels. ESMA describes the ladder label as one some providers use when the expiration strike differs from the underlying asset’s initial price.
Consider three hypothetical contracts asking whether an asset will finish above 100, 102 or 104 at the same deadline. If it finishes at 103, the first two conditions are satisfied and the third is not.
Where those levels are separate contracts, buying several means taking several positions. A win at one level does not automatically make the whole group profitable. The purchase prices and amounts committed to the losing levels still count.
Compare the cash amounts rather than the advertised percentage alone. Suppose one hypothetical contract costs $80 and returns $100 if successful, while another costs $20 and returns $100. Their potential profits are $20 and $80 respectively, but those figures do not tell you how likely either condition is to occur.
Expiration periods are not separate payout types
A 60 second contract describes a duration, not a complete structure. It still needs a condition: finish above a strike, touch a barrier, remain inside a range, or something else. The same applies to labels such as hourly, daily or weekly.
Keep three questions separate: what market is being observed, what must its price do, and how long does it have? A hypothetical five minute gold high/low contract and a one hour gold high/low contract share the same basic payout condition but use different deadlines.
Duration also changes the task for barrier contracts. With an unchanged barrier and continuous observation, extending a no touch contract adds more time during which it can fail. Extending a one touch contract adds more time during which its target can be reached. That follows from the contract definitions, not from a claim that either trade offers good value.
Provider rules also determine when the clock starts. Dukascopy’s trading conditions, for example, describe an execution countdown before a market order begins. Check the recorded start time rather than assuming it matches the instant you clicked.
Fixed percentage returns versus exchange pricing
Contract type and pricing method are separate issues. Before comparing two offers, translate both into the amount paid, the amount returned after success, and the amount lost after failure.
Percentage return model
Suppose a hypothetical contract requires a $100 stake and offers an 80% net return on success. A win returns $180: the original $100 plus $80 profit. A loss returns nothing and costs $100.
One win and one loss therefore produce a $20 loss. With unchanged stakes and returns, no refunds and no extra fees, the break even win rate is:
$100 ÷ ($100 + $80) = 55.56%
This is why a 50% success rate need not mean breaking even. The SEC’s explanation of binary option returns warns that advertised returns can obscure a payout structure with a negative expected result.
Quoted contract price model
In an exchange style model, the buyer pays a quoted price for a contract with a stated settlement value. The CFTC’s explanation of event contracts describes this pricing approach for binary event outcomes. Event contracts are a broader category, however, and not every event product has a simple binary payout.
For illustration, buying a contract for $0.40 that pays $1 if successful produces a $0.60 profit before fees. If it settles at zero, the loss is $0.40. Buying the same settlement outcome for $0.80 leaves only $0.20 potential profit while putting $0.80 at risk.
Some exchange contracts can also be sold before settlement. That creates a possible intermediate profit or loss rather than the final binary result, subject to trading rules, available orders and fees. Do not assume an early exit will be available at the price you want.
Read the settlement rules before comparing types
The chart is not the contract. A price shown on an unrelated website does not establish whether your trade met its condition. ISDA’s commodity derivatives disclosure explains why the agreed price source, observation rules and definition of a barrier event matter.
Before placing a trade check these details:
- Price source: Which quote, index or calculation determines the result?
- Equality: Does landing exactly on the strike or boundary count as success, failure or a refund?
- Observation: Is price checked at expiration, continuously, or at stated intervals?
- Cash result: Does “payout” include the original stake, and what fees apply?
Do not assume a tie means money back. Dukascopy’s standard binary option rules, for example, treat an expiration price exactly matching the strike as a losing outcome.
Provider checks belong alongside contract checks; the guide to binary options brokers addresses that separate decision. Likewise, a contract description is not evidence that a trading method works. Evaluating binary options strategies requires accounting for purchase prices, payouts and losses, not just counting correct forecasts.
Availability depends on your jurisdiction
Do not treat this list as a menu of products legally available everywhere. For US derivatives providers, follow the CFTC’s registration and background checking guidance. An overseas license does not, by itself, establish permission to solicit US customers.
In the UK, the FCA’s consumer guidance confirms the retail binary options ban, effective from April 2, 2019. The broader binary options regulation guide covers jurisdictional questions.
For comparing structures, write down the contract’s condition in one plain sentence. Then test it against three possible price paths: a steady move, a brief touch followed by a reversal, and a finish exactly on the boundary. If the results remain unclear, the product label has not told you enough.