Puts Up Or DownCall options are also known as digital options and are a relatively simple form of binary option. A buyer will choose to purchase a binary call option when he or she believes that the asset price will rise over a period of time. In order for a call option to be successful, the asset price must rise above the price that the asset was at when the buyer placed their bid. This is known as the strike price.These instruments are referred to by a few names, including up/down, call/put, and of course, high/low binary options. Most consider them to be the simplest of all binary options types. They are essentially a bet on whether an assets price is going to move up or down. Youll find this type of instrument at nearly every top binary options broker.For clarity, a call is simply a contract in which one party agrees to sell its ownership stake in an asset at a certain price to another party. If the price of the asset increases, the second party (i.e. the buyer of the contract) profits. A put is a similar type of contract. The difference is that the buyer of the contract profits if the price of the asset falls.These instruments involve price ranges, or boundaries. If you correctly guess whether the price of the underlying asset will fall within a particular range, or float outside of it, youll receive the posted return on your investment. If you guess incorrectly, youll lose your investment (excluding a rebate, if the broker offers one).Range OptionsKnown as tunnel bets and boundary betting, range options work by choosing whether a price expires within a particular price range. I think the range options have the most types of synonyms. They are also known as in and out options because you are either betting in the range or outside of the range.Range options are less common than high/low binary options. They present a higher risk of loss, but also offer a higher return. Its not uncommon for potential returns on boundary options to climb to 300 and above.With these instruments, profit and loss are determined by your ability to guess whether an assets price will reach, or touch, a specific price. If the price touches the target price, and you guessed it would do so, the trade closes and you receive your expected return. Otherwise, the trade remains open until it expires out of the money.Touch or No Touch OptionsThis style of binary option is simple and popular. They work by having a certain trigger price point. If you believe the assets price will hit that price point in a certain time frame you have to bet on the touch. If the price touches that trigger then the trader wins and the trade is over. If the trader bets against the price touching a certain point then the opposite is true.These binary options work on the premise as touch/no touch instruments. The difference is that two price barriers are used rather than only one. The two prices form high and low points between which the assets price fluctuates. Profit and loss are determined by your ability to guess whether the price will touch either barrier.If you select a double touch trade, youll receive a payout if the asset reaches or breaches either target price. If you select a no double touch option, youll receive a payout if the price remains between the barrier, touching neither of them.There are two different types of binary options trades as classified according to the payout. Cash or nothing is a trade in which the participant either receives a fixed amount of cash for winning or nothing for losing. Keep in mind that receives nothing doesnt fully describe the consequences of a loss. The trader generally forfeits the entire risked amount, however some brokers have rebates on losses.Asset or nothing is just like the cash or nothing type, except that the trade pays out the value of the underlying financial instrument instead of cash. These types of binary options are not as prevalent as the very popular cash or nothing style of options.Another way of classifying trades is to refer to American-style or European-style trades. In American-style trades, the options can be exercised as soon as the underlying asset hits the strike pricemeaning you dont have to wait through the entire expiration or maturity period. With European-style trades, you dont win anything if the asset doesnt hit the strike price (or trade above or below it as you wagered) at the expiration time. That means if the strike price is hit before the maturity date is reached and then the trade goes back against you, you lose. In other words, this type of trade is more specific where timing is concerned.There are two types of instruments: those that pay cash and those that pay in the form of the underlying asset (assuming the trade expires in the money). The instruments youll find at the binary options brokers we recommend represent the former, called cash or nothing binary options.Cash Or Nothing OptionsCash or nothing binary options refer to the fact that you either finish the trade in the money our out of the money. You either won money or lost your money. The real cash or nothing binary options are set up this exact way, with a fixed return if you win and a loss of your trade amount risked if you lose. A few limited brokers offer rebates on losses (AnyOption offers 15 rebates) so the cash or nothing name is not 100 accurate.Most binary options types are based on this cash or nothing premise. The percentage return the trader receives if the instrument expires in the money is posted by the trade. It is known before the trade is executed. This a major advantage over other types of trading where the amount of potential profit or loss is unknown.This is a variation of the conventional cash or nothing instrument. A lot of binary options brokers offer rebates to traders whose options expire out of the money. In most cases, the rebates range between 5 and 15 of the amount invested. For example, if you invest 100 in a trade that expires out of the money, and the broker offers a 15 rebate, you would only lose 85. Not all brokers offer rebates.