How Digital Options Work on IQ Option

Setting Up a Trade

Four decisions build the contract, and each one changes the terms of the other three: which asset the condition is about, which strike it is measured against, when it is measured, and how much is committed to it.

The clearest way to understand this instrument is to watch it being assembled. Unlike a position in a currency pair, which exists the moment you buy and ends whenever you decide, a digital option is a contract you specify completely before it begins. Nothing about it is adjusted afterwards by your judgement; it resolves on its own terms at a moment you chose.

Choosing an asset

The first choice names the thing the condition is about. Digital options are written on underlyings drawn from the usual families in retail markets — currency pairs, indices, commodities, stocks, crypto — and which of them appear on any given account depends on the entity that account is registered with. This review could not confirm which underlyings are offered in any named country, so the list you should trust is the one shown to you on the platform after your country is selected.

What the choice actually determines, mechanically, is which price series the contract will be measured against and which strike ladder is available for it. Assets that move more in a short window produce a differently shaped ladder from assets that move less, because the distance to any given strike means something different in each case.

Selecting a strike

The second choice is the one that defines this instrument. A strike is the price level the contract is settled against — the condition is whether the market price is above or below that level at expiry. On a digital option the strike is not fixed for you; you select it from a ladder of levels arranged around the current price.

Selecting a strike close to the current price is asking for a small move. Selecting one further away is asking for a larger one. Each rung of the ladder therefore carries its own terms, and moving up or down the ladder changes what you are being offered as directly as changing the amount changes what you are risking. A reader who skips this control has not chosen a default; they have accepted somebody else's condition without reading it.

Setting an expiry

The third choice sets when the condition is measured. Until that moment, nothing about the outcome is decided; at that moment, the price either satisfies the condition or it does not, and the contract closes itself. This site publishes no list of available expiries and no minimum or maximum duration, because those belong to the platform and change; what is worth knowing is the shape, which is that these are short-horizon contracts rather than open-ended positions.

The interaction between the two middle choices is the part worth sitting with. A strike a long way from the current price asks more of a short expiry than of a longer one, and the terms on the ladder reflect that relationship. Change the expiry and the ladder changes with it — which is the clearest available demonstration that you are pricing a condition rather than picking a button.

• Asset — which price series the condition is about.
• Strike — the level the price is compared against at expiry.
• Expiry — the moment the comparison is made.
• Amount — what is committed, and therefore what can be lost.

Once those four are set, the contract is fully described. The comparison with the older fixed-return structure is where the significance of the second item is worked through properly.

The strike is the control that turns this from a two-way choice into a priced condition, and it is the one that a screen borrowed from an older product does not train you to notice.

The Payout Mechanics

The potential return is not a property of the product but of the specific contract you assembled, because it moves with the distance between your chosen strike and the current price of the asset.

This is the section where most explanations of this instrument reach for an example with numbers in it, and where this one does not. No payout percentage, return figure or worked example appears here or anywhere else on this site. The mechanism is describable without them, and describing it without them is more honest than inventing a scenario that looks like evidence.

Variable potential return

On a fixed-return contract, the potential return is known because it is set by the contract as offered. On a digital option it is known too, but per rung: each strike on the ladder is displayed with its own terms, and choosing a strike is choosing those terms. There is no single figure that answers "what does this pay", because the question is incomplete until the strike is named.

That is the whole reason this instrument cannot be summarised with a number. Any article that gives you one has either fixed the strike silently or is describing a different product. The live ladder is the only accurate source, and it is on the platform.

Strike distance effect

The relationship runs in the direction intuition suggests. A condition that requires less of the market carries less generous terms; a condition that requires more of it carries more generous terms. Neither end of the ladder is a better choice than the other, and this site does not suggest one — the point is that the ladder is a trade-off made visible, and reading it is the skill this instrument actually asks for.

Two consequences follow, and both are practical. First, comparing two digital options is meaningless unless their strikes and expiries are comparable. Second, a change to the expiry re-prices the whole ladder, so a strike that looked one way a moment ago may look different after the expiry is adjusted. Set the expiry, then read the ladder, in that order.

Outcome at expiry

At expiry the price is compared against the strike and the contract settles. If the condition is satisfied, the contract returns the amount committed plus the return attached to the strike you chose. If it is not, the amount committed to that trade is lost. That is the plain description of an instrument with a defined risk and a defined settlement, and it deserves to be read as plainly as it is written.

Risk here is the ordinary risk of this instrument class, stated without softening: a short-expiry contract of this shape can lose the full amount committed to it, and the short window compresses the decision to commit. The page on the risks of this family covers that side in more detail.

There is no such thing as the payout of a digital option in general — only the terms of a specific strike at a specific expiry, read live before the contract is opened.

The Interface

The order panel is a small set of controls sitting beside a chart, and each control maps directly onto one element of the contract described above, which makes the screen readable once you know what you are assembling.

Screens change and this site does not publish screenshots or claim to have tested any build of any platform. What follows is a description of the shape these interfaces take across the market, offered so you can locate the four decisions rather than as a walkthrough of a particular release. The platform runs in a desktop or mobile browser after sign-in, with mobile apps for Android and iOS and a downloadable desktop client also offered.

Charts and controls

The chart carries most of the screen and shows the price series for the asset you selected. What distinguishes the digital-option layout from a plain trading chart is that the strike ladder is drawn against it: levels arranged above and below the current price, each with its own terms displayed, so the trade-off described in the previous section is visible rather than buried in a table.

Around the chart sit the controls for the remaining elements. Somewhere there is an expiry selector, somewhere an amount field, and somewhere a pair of controls for the direction of the view being taken. That is the whole vocabulary, and everything else on the screen is navigation, account information or education.

Order entry

Assembling the contract is a sequence, and the sequence matters because the earlier choices change what the later ones are offering. Here are the six steps, in the order the panel is designed to be read:

1. Select the asset the contract will be written on.
2. Set the expiry, which re-prices every strike on the ladder.
3. Read the ladder as re-priced, from the strikes nearest the current price outward.
4. Select the strike whose condition matches the view you are taking.
5. Enter the amount, which is the amount at risk if the condition is not satisfied.
6. Confirm, and check that the open position shows the asset, strike and expiry you intended.

Those six steps describe the mechanism and nothing else. They are not a method, they do not imply an outcome, and step four in particular is a decision this site does not make for you. What the sequence guards against is the common failure of confirming a contract whose strike was chosen by the default rather than by the reader.

Position tracking

After confirmation the contract appears in a list of open positions with its own countdown to expiry. Because the contract settles itself against the strike at the appointed moment, there is nothing to manage in the way an open position in a currency pair is managed — the decisions were all made before confirmation, which is the defining rhythm of this instrument class.

• Check the position record against what you intended to open, immediately, while the trade is fresh.
• Read the countdown as the contract's whole remaining life, not as a window for adjustment.
• Treat the settlement record as the authoritative description of what happened, not the chart.
• Where a control behaves differently from this description, the platform's own help material is the source, not this page.

Everything decisive about a digital option happens before the confirm control is pressed, which makes the order of the six steps the practical heart of the mechanism.

Digital Versus Old Binary

Set beside the fixed-return contract that dominated the earlier retail market, the digital structure adds one control and changes one property, and those two changes account for every other difference between them.

Most readers arrive at this instrument through the older one, which is why a direct comparison is more useful than another definition. The differences are narrow, structural and easy to hold in your head once the strike ladder is understood.

Strike flexibility

A binary option is a contract with a yes-or-no outcome on a single condition, typically whether an asset's price is above or below a level at a fixed expiry, with the return fixed and known before entry and the outcome all-or-nothing. The level is part of the contract as offered. A digital option hands that level to the trader.

That is the whole of the structural difference, and it is enough to make the two different products rather than the same product under two names. The older screen asked for a direction and a deadline. The newer one asks for a direction, a deadline and a level, and the third question is the one that carries the pricing.

Payout variability

The fixed return of the older contract is what made it summarisable: one figure described the offer. Handing over the strike removes that possibility, because a condition the trader can make harder or easier cannot carry constant terms. This is why the ladder exists and why no figure appears in this article.

The practical effect is that reading replaces recalling. On the older structure a trader learned the terms once. On this one the terms are read fresh for each contract, against the strike and expiry actually selected.

Regulatory framing

Rules are written around product definitions rather than around marketing names, so the structural difference between these two contracts is real independently of what anyone calls them. What that difference implies for any specific rule is a legal question this site does not answer.

The one measure stated as fact here is the European one. In 2018 ESMA introduced EU-wide product-intervention measures that prohibited the marketing, distribution and sale of binary options to retail clients across the European Union and restricted leverage on contracts for difference; national regulators later put equivalent measures in place permanently in their own jurisdictions. From that follows one narrow consequence: binary options are not part of the retail offer to EU clients. Beyond it, this review could not confirm the legal status of binary options in any individual country. Beyond the 2018 EU measure, this review cannot cite what any individual regulator has done, and scope, wording and current status differ by jurisdiction and change over time — so check the register or policy pages of your own regulator before acting.

Nothing in the previous paragraph should be read as a claim that the digital structure sits inside or outside any particular rule anywhere. The dedicated comparison page and the regulatory landscape page both hold that line.

One added control explains the entire difference: give the trader the level and the fixed payout necessarily becomes a ladder of priced conditions.

Practising First

Watching the ladder move on a practice account teaches this mechanism faster than any article can, because the relationship between strike, expiry and terms is something you see rather than something you memorise.

The instrument described on this page has one property that makes it unusually well suited to being learned rather than read about: everything decisive is visible on the screen before any money is involved. That is worth using.

Using the demo

A practice account funded with virtual money is offered, and it is the direct answer to "what is this product actually". Open it, pick an asset, and spend a few minutes doing nothing but moving the expiry back and forth and watching what happens to the strike ladder. The relationship this article has been describing in prose becomes obvious in about a minute of that.

Then assemble a contract deliberately, using the six steps above, and check that the open position matches what you intended. The habit of verifying the record against the intention is worth building where nothing is at stake. a practice account funded with virtual money is where to do it.

Understanding risk

What a practice account cannot teach is the part that matters most, and it is worth saying so plainly. Virtual money removes the consequence, and the consequence is the thing that changes decisions. The mechanics transfer; the experience of committing your own money to a short-horizon contract does not.

• These contracts can lose the full amount committed to the trade, and the short window compresses the decision to commit it.
• The amount at risk is known before entry, which is a property of the contract and not a form of protection.
• This site publishes no approach, no position-sizing rule and no outcome of any kind, because none is grounded in anything we can point at.
• Nothing on a practice screen is evidence about results on a funded one.

Regional availability

Whether digital options appear on your account at all depends on the entity your account is registered with and on local rules. This review could not confirm availability in any named country, so this page publishes no country list and no assurance either way; the current product list is shown on the official site once you select your country.

The EU-facing business runs through the Cypriot investment firm on the CySEC public register, listed as IQBroker Europe Ltd (ex IQOption Europe Ltd), CIF licence 247/14, dated 30 July 2014, company number 327751, status Authorised as of the check date. Licence and company details were checked against the CySEC public register on September 7, 2026; product availability changes by entity and country and should be confirmed on the official site. Arrangements outside the EEA are different and are disclosed in the terms of the entity your account is registered with. For the wider picture, the availability page and the current product families take the question further, and the site's central answer is the place to start over if you arrived here mid-thread.

A practice account is the fastest teacher of the mechanism and no teacher at all of the consequence, and both halves of that sentence are worth remembering before funding anything.