Exotic binary options are a name that is used for different types of binary options that have very specific conditions to mature in the money and that usually give you a very high return if they do. Exotic binary options gives you the possibility to earn very high returns on your investments but the majority of these options will mature outside the money. Only a very small amount of all exotic options will mature in the money.
We recommend against investing in exotic binary options. They give the broker an undue edge and make it very hard to earn money. There is a reason they give a very high return. That reason is that it is very unlikely that they will mature in the money. Exotic binary options are very profitable for the brokers. Binary options are sometimes accused of being scams. This is not true but exotic binary options play a large part in creating this reputation. They are sometimes dangerously close to being scams.
We are not saying that you should never buy exotic options. There are rare times when a exotic option can be a good speculation. Sometimes a broker might have made a mistake and forgotten to factor in an important factor in the creation of a binary option which makes it worth buying. Exotic options are usual an easy way to lose money.
Types of exotic options
One touch options
One touch options are options that ends in the money if the underling asset reach a certain value at least once during the maturity of the option. You can read more about one touch options here.
No touch options
No touch options are options that matures in the money if the underlying asset never touches a certain value during the maturity of the option. Read more here.
In / Out options
In / out options are options where you goal is to predict whether the value of a certain asset will be inside or outside a certain range when the option matures. If you correctly predicts whether the asset will end up in or outside the range at the time of the maturity then you make a large profit. These options are also called range options and boundary options.
Exotic over/under options
Over/ under options can be both regular options and exotic options. The regular options usually only require small changes in the price of an asset to mature in the money. Exotic over/under options on the other hand promise large payouts if a certain asset will reach a certain value for from its current value during the maturity. They seldom mature in the money.