*In the Black–Scholes model, the price of the option can be found by the formulas below.[25] In fact, the Black–Scholes formula for the price of a vanilla call option (or put option) can be interpreted by decomposing a call option into an asset-or-nothing call option minus a cash-or-nothing call option, and similarly for a put – the binary options are easier to analyze, and correspond to the two terms in the Black–Scholes formula.*

**While binary options may be used in theoretical asset pricing, they are prone to fraud in their applications and hence banned by regulators in many jurisdictions as a form of gambling.[4] Many binary option outlets have been exposed as fraudulent.[5] The U.S. FBI is investigating binary option scams throughout the world, and the Israeli police have tied the industry to criminal syndicates.[6][7][8] The European Union is publishing regulations that will ban binary options trading.[9] ASIC considers binary options as a “high-risk” and “unpredictable” investment option.[10]**