1- According to the moment in which the liquidation can be carried out
A- European or With Maturity
This type of option exists when the default condition is met or not, only at the expiration of the chosen term and not at any time prior to it.
Example: You buy an option based on the fact that Apple's stock is going to rise at the close of the day. If at the end of the day this condition is met you will be entitled to the total of the predetermined sum. Of the opposite option will be worth zero.
B- American or Pre-Maturity Settlement
This kind of binary option is the one that allows its settlement at any time before the expiration date, once the predetermined condition has been met.
Example: You buy an option based on the criterion that Apple will drop 10 points before 16:00 CET.
If this option goes down to that level at any time of the day before the expiration date, the option will be settled immediately and you will win no matter what happens after the condition has been met.
2- According to the behavior that the asset must have for the option to generate utilities
A- With Single Barrier or One Touch range
In this type of binary option, it is sufficient that the asset arrives once, at any time before maturity, at the price predicted by the investor. If this happens the investor will be credited to the value agreed in advance, otherwise the option will be worth zero.
B- With Double Barrier Reach or Double One Touch Reach
The investor may set two limits to which he considers that the asset can reach. If the asset touches any of them, the investor will be credited to the default value, otherwise the option will be worth zero. This type of option is quite popular in the currency market and is used by investors who predict sudden changes but do not know exactly in which direction.
C- No Single Barrier Scope or No Touch
The investor will establish a limit value, to which the asset can not reach; If you do the option will be worth zero, otherwise the investor will be credited to the predetermined amount.
D- No Range of Double Barrier, or Range
In this type of binary option, the investor will establish two limit values within which the asset will move without touching them. If it is accurate and the asset does not reach either of the two limits, the investor will receive the value of the option determined in advance; Otherwise the option will be zero.
3- According to the condition that must be given for the option to generate utilities
A- All or Nothing, Cash or Nothing
This is the basic type of binary options, in which the option will generate profits to the investor if the predicted rise or fall condition is met at the time of purchase. If this condition is not met, the inverter will receive nothing.
B- Asset Allocation o Nothing o Asset or Nothing
This classification is very similar to the All or Nothing type and is valid only for Binary call purchase options. In these, the option seller will not pay anything if the underlying value is below the strike price and will pay the price of the asset agreed upon at its price is higher than the exercise price.
C- At the Money
In this type of options, the holder of the same, will receive the default if at the expiration the value of the asset, is equal to the strike price, ie if it is in "at the money". If this condition is not given the investor will not receive anything.
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