From the trader’s perspective, the main advantage of binary options trading is that the Risk taken is limited to the premium that the trader pays up front to take on a binary option position. So in above example, the Risk taken by the trader is limited to $100 in that particular position.
This benefit means that the binary options trader can feel secure in knowing that their downside is limited to their initial trade size. While they can still profit if their market view turns out to be correct, they avoid having to worry about stop loss order slippage or losing their trading discipline. Furthermore, binary options are a simpler trading vehicle having a limited risk profile since they either pay off a fixed amount or they do not, depending on where the underlying instrument is trading at the binary option’s expiration. Another advantage is that binaries can often be traded for shorter time frames (1 hour, ½ hour or even 15 min) via binary options trading platforms then are typically available for normal options offered by exchanges.