Binary options are different from traditional options contracts in several ways. They offer a more flexible and accessible way for investors to purchase options without having a fixed price. Investors of binary options can therefore determine the amount that they wish to commit to purchasing the option. Binary options also allow investors to predetermine their level of profit and loss prior to purchasing the option. This predetermined payout level is a percentage of the initial investment used to purchase the option. Similarly, the potential losses are predetermined and will result in a loss of the initial investment less the protection rate which is often around 15%. Therefore, When a binary option expires ‘out of the money’ the client can maintain around 15% of the investment position credited back to their account once the trade expires. An example of this is an investor who believes that, over the course of the day and after an inflated rise, the value of gold will fall to around 1588. The investor logs into her account with a view to executing a put option of $100 at 9:00 with an expiry time of 14:00. The payout level for this option is 120% with a current strike price of 1590. The investor executes the trade and at 14:00 the option expires with the price of gold at 1589 giving a successful payout of $120 on her $100 investment.