AMEX (now NYSE American) offers binary options on some exchange-traded funds and a few highly liquid equities such as Citigroup and Google. On the exchange binary options were called "fixed return options" (FROs); calls were named "finish high" and puts were named "finish low". To reduce the threat of market manipulation of single stocks, FROs use a "settlement index" defined as a volume-weighted average of trades on the expiration day. AMEX and Donato A. Montanaro submitted a patent application for exchange-listed binary options using a volume-weighted settlement index in 2005. CBOE offers binary options on the S&P 500 (SPX) and the CBOE Volatility Index (VIX). The tickers for these are BSZ and BVZ, respectively. In June 2009 Nadex, a U.S.-based exchange, launched binary options for a range of Forex, commodities, and stock indices' markets.
A binary option is a financial exotic option in which the payoff is either some fixed monetary amount or nothing at all. The two main types of binary options are the cash-or-nothing binary option and the asset-or-nothing binary option. The former pays some fixed amount of cash if the option expires in-the-money while the latter pays the value of the underlying security. They are also called all-or-nothing options, digital options (more common in forex/interest rate markets), and fixed return options (FROs) (on the American Stock Exchange).