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I guess it may seem that binary options are simpler. But the main problem is if what you are betting on isn't a binary (on/off) type of bet, then you lose it all if you are just slightly wrong, and you don't benefit additionally if you are really right.

So a real binary bet, like, will Obama or Romney win the election, there's only two possible results (barring freak extremes) so where Obama wins by one electoral vote or a landslide, doesn't matter to the bet.

But betting on what the value of Google will be, is on a sliding scale. A binary option might say, will it be above or below \$735 on January 18, 2013 (it's now \$734). But Google's value will slide around that mark with many possible results; it might be \$735.01, or \$800, or \$600.

Someone today bet it will be above \$735 by buying the traditional option call GOOG130119C00730000 and paying \$38.20 for the bet. Now if they're wrong, they lose it all, but if they are right, then it matters how much. If Google goes to \$800, they get \$70. If Google goes to \$900, they get \$170. If Google goes to \$1000, they get \$270, etc. That's traditional options.

With binary, you might bet to receive \$100 if Google will be above \$730, and the privilege might cost you, I estimate, \$58. (I don't know if this price actually is available, but keep reading.) If Google is \$731, \$800, \$900, \$1000, whatever, you get a flat \$100.

Simpler, but limited.

You could accomplish nearly the same thing by buying traditional calls right below it and then selling calls at the price mark (This called a spread... I think?)

`buy  730.00	GOOG130119C00730000	41.10sell 735.00	GOOG130119C00735000	38.20`

So to bet Google will be above \$735 you'd buy for \$41.10 and sell at \$38.20, a difference of \$2.90. If you are wrong and Google is much below \$735, you'd likely lose everything. (Actually it slides between \$5 and \$0 at prices between \$735 and \$730: being slightly wrong might not hurt.) If you are right you would get the \$5, and only \$5. If Google shoots through the roof, you don't benefit by being really right. Paying \$2.90 for a chance to win \$5 would be about the same as paying \$58 to win \$100, that's where I'd guess the binary option market price to be.

Hope this is useful! Any criticism of my example is welcome.