A binary option is a sort of options contract in which the payoff is wholly dependent on the conclusion of a yes/no proposition, often relating to whether the price of a certain asset will increase above or fall below a certain amount.
Let's assume stock Colgate-Palmolive is currently trading at $64.75. A binary option has a strike price of $65 and expires tomorrow at 12 p.m. The trader can buy the option for $40. If the price of the stock finishes above $65, the option expires in the money and is worth $100. The trader makes $60 ($100 – $40).