Binary options (also known as digital options or exotic options) is a relatively new trading method in the financial market. It became available worldwide in 2008, before that investors had been using it through licensed brokers only.
Binary options are all about choosing one option out of two. To earn money with binary options you need to predict in which direction the price of a certain asset is going (higher or lower), or if the price is going over the estimated level in a given period of time (e.g. one-touch options). An asset may be within the currency market, the equity market, the commodity market or the stock market indices. A detailed description of the markets can be found here.
For instance, we estimate whether the currency pair EUR/USD will be higher (call option) or lower (put option) than X (opening price) within an hour. If we are not mistaken, we earn ~70-90% of the investment (each broker sets a different minimum and a different level of return for a given option). Some brokers also offer up to 15% refund in case of not winning.