Leverage

The nature of binaries changes sharply as expiry nears. Shares and futures
have linear P&L profiles that lie at a 45º angle to the horizontal axis.
Conventional traded options have profiles that approach an angle of 45º.
A 45º angle means that if the share/future/option goes up by 1¢, then the
owner makes 1¢. A binary approaching expiry has a P&L profile that can
exceed 45º (indeed it will approach the vertical for an at-the-money
option) meaning that a 1¢ rise in the underlying share could translate into
a multiple (say 5¢) increase in value of the option. Clearly this feature is
likely to attract the player who is looking for short-term gearing, for it is
safe to state that a binary option can provide greater gearing than any
other financial instrument in the marketplace.