Binary options are a type of derivative contract where traders predict whether an asset's price will rise or fall within a specified time frame. The outcome is binary—either a fixed payout if the prediction is correct or nothing if it is wrong. They are used for short-term speculation on stocks, currencies, commodities, and indices. While popular among retail traders, binary options are considered high-risk and are subject to regulatory restrictions in many jurisdictions due to concerns over fraud and gambling-like characteristics.