A binary option is an option in which the payoff can take only two possible outcomes, either 0.01 BTC or nothing at all (in short, all or nothing).
Let's take a look at an example. You pay 0.004 BTC to buy a XBTCUSD call binary option that has strike price equal to 500 and expires at next Friday night.
If the index XBTCUSD is indeed above 500 at the end of next Friday, you will get 0.01 BTC payoff (the user who sells the option to you will lose 0.01 BTC), so your profit is 0.01 - 0.004 (BTC). Otherwise you will get no payoff and thus lose the initial 0.004 BTC.
But you don't need to hold the option until it expires, you can sell the option to others before it expires.
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