There are currently four types of underlying assets available in binary option trading. They are stocks, indices, commodities and currency pairs.
A stock is the value of a company, represented in shares. The higher the share price, the more a company is worth. When investors purchase a binary option on a stock, rather than buying the shares themselves, they are investing in the direction in which the shares will move. This enables investors to benefit from expensive stocks whose high price might otherwise have excluded them from the market.
An index is made up of several stocks together. For example, the Dow Jones is made up of 30 stocks which are traded on the New York Stock Exchange and the Nasdaq. This means that rather than buying several individual stocks, an investor can reach more stocks in one purchase, gaining exposure to a wider section of the market.
A commodity is a good which can be traded. The binary option platforms on the (website name) site, currently offer options on oil, natural gas, gold, silver and copper.
A currency pair or forex (foreign exchange) option involves estimating how two different currencies fluctuate relative to one another. They are quoted in pairs such as EUR/USD which represents how many Euros are needed to buy 1 USD. The stronger the USD is, the higher the rate of the currency pair will be. On the binary option trading platforms there are 9 different currencies, creating many combinations of forex options.